TPR acts in insolvency case to ensure members receive PPF benefits
Tuesday 4 October 2016
The Pensions Regulator has used its powers to ensure members of a closed defined benefit (DB) scheme receive Pension Protection Fund (PPF) compensation after the scheme’s rules were changed.
Former trustees of the DCT Civil Engineering Staff Pension Fund mistakenly executed a change to the scheme’s rules which resulted in accrued benefits being calculated on a defined contribution (DC), rather than a DB basis. This was a material change to their benefits, and it meant some members would not have been eligible for PPF compensation.
Following an investigation, TPR declared the rule change void, and today issued a Regulatory Intervention report (PDF, 180kb, 5 pages) on the case.
DCT Civil Engineering went into administration in January 2014 and was subsequently dissolved. As a result of its investigation, TPR issued a Determination Notice (PDF, 231kb, 8 pages) recommending its Determinations Panel declare the relevant Deed void. The Panel’s order had the effect of confirming the scheme as a DB one.
This was not challenged by the directly affected parties and enabled the PPF to take on the scheme and its 11 members.
Nicola Parish, Executive Director for Frontline Regulation at TPR, said: “This case shows that we will use our powers to protect schemes in appropriate cases, regardless of the number of members. The modification of the scheme rules had a serious impact on reducing members’ accrued benefits, and so we considered it appropriate to act to protect them.
“By using our power to declare changes to the scheme rules void, we’ve enabled members to benefit from PPF protection, which will be higher than they would have received if the amended DC scheme rules had been allowed to stand.”
- The intervention report has been published under section 89 of the Pensions Act 2004 which gives TPR the power to publish information on cases where it has exercised or has considered exercising its powers.
- TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).
David Morley 01273 662091
Matt Adams 01273 662086