Regulator issues Financial Support Directions on Sea Containers

The Pensions Regulator today (Wednesday) confirmed that on 31 January 2008 Sea Containers Limited withdrew its appeal to the Pensions Regulator Tribunal against a June 2007 Determinations Panel decision to issue two Financial Support Directions on the company.

As a result of the withdrawal the Determinations Panel issued two Financial Support Directions on Sea Containers Limited which, as parent company, must now provide financial support for two pension schemes belonging to its London-based UK subsidiary Sea Containers Services Limited.

Sea Containers Limited will be compelled to provide a form of financial support to the two schemes within 30 days of the Financial Support Directions being issued.

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1. Sea Containers Limited withdrew its appeal to the Pensions Regulator Tribunal on 31 January 2008.
2. The Pensions Regulator's Determinations Panel issued the Financial Support Directions on Sea Containers Limited on 5 February 2008.
3. A Financial Support Direction requires a connected or associated party to support a final salary pension scheme within the same corporate group. Under the Pensions Act 2004 a Financial Support Direction may be issued where the regulator concludes that the sponsoring employer is a service company or is insufficiently resourced, and it is reasonable to do so. The Act states that if a Financial Support Direction is ignored, the regulator may issue a Section 47 Contribution Notice for a specific sum. A statutory debt then exists which can be pursued through the civil courts. (Pensions Act 2004 Section 43 - 50.)
4. The regulator issued a Warning Notice to Sea Containers Limited (19 October 2006) which notified them that the regulator was considering the issue of Financial Support Directions. Representations were received from the trustees (31 January 2007) and the company (14 May 2007). The Pensions Regulator (http://www.thepensionsregulator.gov.uk/) proceeded to an oral hearing in front of the Determinations Panel where the representations, along with oral submissions, were considered.

At the oral hearing on June 12/13 2007 the Determinations Panel determined that Financial Support Directions be made. The Determination Notices were published on 15 July 2007. The Determination Notices are available to view on the regulator's website. These direct that Sea Containers Limited as a parent company financially supports the two pension schemes of its London-based subsidiary Sea Containers Services Limited.

The Reasons of the Determinations Panel were published on June 27 and are available to view on the regulator's website. Sea Containers Limited appealed to the Pensions Regulator Tribunal (www.financeandtaxtribunals.gov.uk/) and a final hearing was scheduled for 5 to 13 March 2008.

On 17 December 2007 an interlocutory hearing requested by Sea Containers Limited was heard by the Tribunal at which matters concerning document disclosure, legal privilege and the scope of Restricted Information were considered. The Tribunal found against Sea Containers Limited on all three points.

5. The Pensions Regulator Determinations Panel is the decision making body of the regulator. Where the regulator wishes to exercise its anti-avoidance powers it is required to provide submissions to the panel. A decision is made by the Determinations Panel as to whether the use of the power is appropriate and, if so, a Determination Notice is issued setting out the reasons for the decision. Our website provides more information on the panel and the determinations process.
6. The Pensions Regulator is the regulator of work-based pensions in the UK, with wide-ranging and flexible powers under the Pensions Act 2004. The powers of the regulator include the ability to:
   • collect detailed scheme information;
   • issue improvement notices and third party notices, enabling the regulator to ensure problems are put right;
   • freeze a scheme that is at risk, while the regulator investigates; and
   • prohibit trustees who are judged not fit and proper to carry out their duties.

   The Pensions Act 2004 also imposes a statutory obligation on 'whistleblowers' to report suspected breaches of the legislation to the regulator.

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