The Pensions Regulator

Clearance

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Our approach

14. Broadly speaking, the regulator’s power to issue a contribution notice is triggered by an act or a failure to act, whereas the power to issue a financial support direction arises because of the circumstances of the employer. However, it may be that consideration of an event leads us to conclude that it would be reasonable to issue a financial support direction. Therefore, applications will generally relate to an event.
15. We have developed guiding principles that trustees and employers should apply when dealing with events that may impact on the scheme and when applying for a clearance statement.
    
    

    Trustees and employers

    • Trustees and employers should recognise and understand that a scheme in deficit on any basis should be treated in the same way as any other material creditor.
    • Trustees should recognise and understand their powers and duties and act appropriately, including managing any conflicts.
    • Trustees should consider taking independent professional advice where appropriate.
    • Trustees and employers should work together in relation to events that may be detrimental to the ability of the scheme to meet its liabilities or to the benefits of the scheme members, communicating and sharing appropriate information.
    • Trustees and employers should understand the nature and the impact of the potentially detrimental event and the appropriate mitigation for the event.
    • Trustees and employers should recognise that the regulator will wish to know about all events that have a materially detrimental effect on the ability of a scheme to meet its liabilities.
16. We have also developed guiding principles that govern the behaviour of the regulator in considering whether to grant a clearance statement.
    
    

    The Pensions Regulator

    • The regulator’s preferred outcome is an appropriately funded scheme with a solvent employer.
    • The regulator will deploy its resources in a risk-based manner, targeting risk in a proportionate, responsive, flexible, pragmatic, consistent, transparent and reasonable way.
    • The regulator will seek to protect members’ benefits and reduce the risk of calls on the PPF, while at the same time recognising commercial activity and business needs.
17. In this guidance, terms shown in bold are defined in the Definitions section.
    

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