Date - 21/11/2017
We refer to your previous Freedom of Information (FOI) response regarding The Pensions Regulator's (TPR) use of section 72 powers.
Can you please provide the following further information as supplemental to your previous response:
1. The names of the schemes where TPR has issued a section 72 notice for the purpose of avoidance and defined benefit (DB) scheme funding, broken down by:
- cases that are closed
- cases that are ongoing
2. The breakdown of public companies versus private companies for the situations where TPR has issued a section 72 notice for the purpose of avoidance and DB scheme funding, broken down by:
- cases that are closed
- cases that are ongoing
3. Related to issuances of section 72 requests, how many investigations into whether to utilise its anti-avoidance powers has TPR launched in the last three years, broken down by:
- cases that are closed
- cases that are ongoing
Furthermore, can you provide information about the following disclosure requirements?
- Does TPR need to inform a sponsoring or related company when it is investigating whether to utilise its anti-avoidance powers (ie in advance of a section 72 request) with respect to a related scheme?
- Does a publicly listed company then have a requirement to notify the market that an anti-avoidance investigation has been launched by TPR, either through an RNS or annual reporting?
- Does a publicly listed company then have a requirement to notify the market that a section 72 request has been issued, either through an RNS or annual reporting?
- Does a publicly listed company then have a requirement to notify the market that a warning notice has been issued, either through an RNS or annual reporting?
I can confirm that we hold information falling within the scope of your request. However, we are unable to supply some of the information requested for the reasons set out below (see ‘Information we are not able to supply’).
Information we are able to supply
Related to issuances of section 72 requests, how many investigations into whether to utilise its anti-avoidance powers has TPR launched in the last three years, broken down by cases that are closed and cases that are ongoing?
TPR has launched 41 investigations into whether to utilise its anti-avoidance powers in the last three years from the date of your request. 20 of these cases are now closed and 21 of these cases are still ongoing. It should be noted that investigations are just one aspect of TPR’s regulatory activities and are often launched after other types of intervention have failed to reach a resolution.
Does TPR need to inform a sponsoring or related company when it is investigating whether to utilise its anti-avoidance powers (ie in advance of a section 72 request) with respect to a related scheme?
There is no legal requirement for TPR to inform a sponsoring or related company when we are investigating but we often do so as a matter of best practice, particularly when the company is likely to be the subject of our investigation.
Information we are not able to supply
The names of the schemes where TPR has issued a section 72 notice for the purpose of avoidance and DB scheme funding, broken down by cases that are closed and cases that are ongoing.
We are unable to give you some of the above information for the following reasons:
Section 31(1)(g) and (2)(c) of the FoIA
The information you have requested falls within the categories of information that are exempt from disclosure under section 31(1)(g) and (2)(c) of the Freedom of Information Act (FoIA). section 31(1)(g) and (2)(c) provides that:
‘Information which is not exempt information by virtue of section 30 is exempt information if its disclosure under this Act would, or would be likely to, prejudice:
(g) the exercise by any public authority of its functions for any of the purposes specified in subsection (2).
(2)(c) the purpose of ascertaining whether circumstances which would justify regulatory action in pursuance of any enactment exist or may arise.’
TPR’s objectives are set out in the Pension Act 2004 (‘the Act’) and amended by the Pensions Acts 2008 and 2014. These objectives include the protection of the benefits of members of occupational pension schemes; reducing the risk of situations arising which may lead to compensation being payable from the PPF; and promoting and improving understanding of, the good administration of work-based pension schemes.
We believe that disclosing the names of schemes in relation to which we have issued a section 72 notice to for the purposes of avoidance and DB scheme funding would be likely to prejudice the exercise of TPR’s functions in ascertaining whether regulatory action is or may be justified.
In exercising the functions in accordance with TPR’s objective as set out above, we conduct investigations, obtain advice and launch formal action. In cases where TPR has launched an investigation, confirmation of that fact or confirmation of what those concerned are being investigated for to the public at large would be likely to adversely impact on the willingness of those subject to the investigation to engage with TPR in co-operating and supplying information. To operate as an effective regulator, we need information about ‘notifiable’ events or other potential avoidance activity to flow to us from voluntary whistleblowing reports and through statutory reporting, so it is important that we ensure no-one is deterred from contacting us. There is a risk that naming schemes under investigation or that have been investigated would harm their reputation through the presumption of wrong doing on the part of the employer or parties connected or associated with the employer. This in turn could impact negatively on these schemes and employers in terms of their reputation and other business activities thus leading whistleblowers to possibly withhold information on ‘notifiable’ events or other potential avoidance activity rather than being open and forthcoming.
TPR’s investigative and regulatory functions depend on open communication with those we regulate, which is facilitated by those communications being confidential. Premature confirmation of an investigation can cause a perceived detriment to the commercial interests of those under investigation, which can further impede co-operation.
For all these reasons, there would be likely to be clear prejudice to TPR’s ability to conduct investigations into whether circumstances justify regulatory action. This would be to the detriment of scheme members and beneficiaries.
The exemption at section 31(1)(g) for the purposes set out in 2(c) of the FoIA is a qualified exemption which requires a public interest test be carried out. The public interest test requires an assessment of whether the public interest in maintaining the exemption outweighs the public interest in disclosing the information. ‘Public interest’ in this context means the ‘public good’ and not just what is of interest to the public or the private interests of particular requesters.
There is a very strong public interest in ensuring the effectiveness of TPR in carrying out its functions because it is through the exercise of these functions that we are able to comply with our statutory objectives. Any prejudice to the way in which we exercise these functions has the potential to have a negative impact on our ability to meet these objectives, which would not be in the public interest. As indicated above, investigations may be prejudiced by disclosure of information relating to them, including confirming whether an investigation is being conducted and if so, what for. It is important to maintain confidentiality around investigations as well as ensuring that we are able to correspond freely and frankly with anyone who might be discouraged from being open with TPR in an investigation if they thought that details of any investigation would be disclosed or that any investigation would be publicly confirmed, especially in cases where it has not yet been concluded. It is also important for us to maintain confidentiality in cases where we have concluded our investigation without the use of powers and where no actions have been taken that require the intervention of regulatory action.
We recognise the general public interest in promoting transparency, accountability and public understanding in how we carry out our functions. This is why we, where possible and when we consider it appropriate, publish reports regarding the regulatory activity we have taken under section 89 of the Act. This would happen at a time considered appropriate to do so and rarely during ongoing investigations as that would prejudice those investigations which would not be in the public interest.
Taking all of this into account, we have considered whether there is a public interest in disclosing the information you have requested at this time. However, in light of the risks and likely prejudice identified, we do not consider there is any significant public interest to be served in disclosing the information you have requested. We therefore consider the public interest in maintaining the exemption under section 31(1)(g) outweighs the public interest in disclosing the information.
Section 43(2) of the FoIA
We also consider the information you have requested falls within the exemption provided for under section 43(2) of the FoIA.
Section 43(2) provides that information is exempt if its disclosure would, or would be likely to, prejudice the commercial interests of any person. We consider that disclosure of the names of the schemes which are the subjects of either anti-avoidance or funding investigations would be likely to prejudice the commercial interests of those schemes and the associated employers. Naming a scheme in this connection runs the risk that some element of wrong doing would be assumed notwithstanding any statement to the contrary by TPR. This may risk causing them difficulty in relation to their commercial activities which would be an unfortunate consequence based purely on an investigation by TPR having taken place. This is a prejudice that is unwarranted and/or unintended.
In these circumstances, we consider the commercial interest exemption is engaged. For the avoidance of doubt, we would add that we understand that information cannot be withheld simply because it would cause embarrassment. However, that is not what is being asserted here, rather that there is a real risk of harm to these schemes’ and employers’ commercial interests which would not be warranted or intended, and therefore would be unfair if we were to disclose their names as requested.
We believe that it would be likely to prejudice the commercial interests of those schemes and the associated employers that we have investigated if we were to disclose the information you have requested. Given that one of our statutory objectives is to protect the benefits of members of pension schemes, disclosing information in a way which could damage the interest of pension schemes and in turn members’ benefits would be contrary to the achievement of that statutory objective.
We consider there is an overriding public interest in protecting members’ benefits and in TPR being able to achieve its statutory objective to protect members’ benefits which outweighs the public interest in publication of the information on scheme names in these circumstances.
In relation to this aspect of your request therefore, we consider that the public interest in maintaining the exemption outweighs the public interest in disclosing the names you have requested.
Section 44(1)(a) of the FoIA
In recognition of our regulatory functions TPR has been given strong powers to demand documents and other information from trustees, employers and others. These powers are balanced by statutory restrictions on how we disclose the information provided to us.
The information you have requested relates to information we would receive in the exercise of our statutory functions and we consider that it falls within the definition of ‘restricted information’ as set out in the Pensions Act 2004 ('the Act').
Restricted information is defined at section 82(4) of the Act as:
‘information obtained by the Regulator in the exercise of its functions which relates to the business or other affairs of any person’.
Under section 82(5) of the Act it is a criminal offence to disclose such information except as permitted under that Act.
Whilst the FoIA is based on the presumption of releasing information, section 44(1)(a) of the FoIA provides an absolute exemption to the requirement to disclose information if the disclosure of that information is prohibited by or under any enactment. In this case, section 82 of the Act prohibits disclosure and we are unable to disclose the information you have requested. This exemption is absolute and does not require a public interest assessment be undertaken.
I can however confirm that we have issued section 72 notices to various entities in the case relating to BHS Pension Scheme and BHS Senior Management Scheme as this information is already in the public domain. The case in relation to these schemes is currently ongoing.
The breakdown of public companies versus private companies for the situations where TPR has issued a section 72 notice for the purpose of avoidance and DB scheme funding, broken down by cases that are closed and cases that are ongoing.
We are unable to provide you with this information as we do not collect details of whether a company is a public or private company.
Whilst it would be possible for us to use publically available resources to search each of the companies in question to ascertain whether they are public or private, this would involve us creating new data we do not already hold. The FoIA provides that public authorities do not need to create new information in order to respond to requests.
We are unable to provide you with the list of companies to enable you to carry out this cross-referencing exercise yourself for the same reasons we are unable to give you the names of the schemes where TPR has issued a section 72 notice, as set out above.
Questions 2 to 4 relating to disclosure requirements
With regard to your disclosure requirements questions 2 to 4, we do not hold this information. Given that these questions relate to the market notification requirements of a publicly listed company, you may find the London Stock Exchange is able to provide you with the answers to your questions.
Alternatively, the Financial Conduct Authority (FCA) may have some published guidance on this topic or may be able to assist you further.