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The Pensions Regulator

Regulatory guidance

Regulatory guidance

Clearance

About this guidance

  1. This guidance is primarily aimed at professional advisers, who should bring it to the attention of employers involved in schemes as well as parties who are connected and associated with employers and trustees. It has been updated in light of our experience of operating clearance and reflects the way that both the regulator and the market have developed since clearance was introduced in April 2005.
  2. It is clear that there are many events that could be detrimental to the ability of a scheme to meet its liabilities (‘detrimental events’). However, in line with its commitment to operate in a risk-based and proportionate manner, the regulator expects a clearance statement to be sought only in relation to 'type A events'.
  3. Type A events are materially detrimental to the ability of the scheme to meet its pension liabilities. Type A events are either employer-related events or scheme-related events. Employer-related events are only type A events if the scheme has a relevant deficit. Scheme-related events are always type A events, regardless of whether the scheme has a relevant deficit. Trustees and employers therefore need to recognise and understand type A events.
  4. Part I of this guidance provides information about: 
    • identifying type A events - assessing the impact of the event on the scheme; and
    • what action applicants and trustees should take during the clearance process, including mitigation and negotiation. 
  5. Part II of this guidance gives further information about:
    • applying to the Pensions Regulator for a clearance statement; and
    • what happens during clearance.
  6. It is not practical to devise guidance that contains sufficient detail to cover all possible circumstances and events. This guidance does not attempt to list all possible type A events.
  7. Professional advisers should ensure that all parties involved in a possible type A event, including employers and trustees, are familiar with the content and spirit of this guidance.
  8. This guidance itself is not a clearance statement, and it does not bind the regulator’s use of its powers, whether or not there is a type A event in accordance with this guidance.