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The number of investigations launched into workplace pension schemes in relation to suspected abuse

FOI reference - FOI-5281
Date - 9 November 2020

Request

The number of investigations launched into workplace pension schemes in relation to suspected abuse of:

  1. The easement that allows for the suspension of deficit reduction contributions.
  2. The easement to allow employers with defined benefit pension schemes to take contribution holidays of up to three months.
  3. The requirement for providers to report late/non-payments of contributions after 150 days' instead of after 90 days'.

Response

I can confirm that we hold information falling within scope of your request.

Information we are able to supply

  1. We have been asked to provide the number of investigations that we have launched into suspected abuse of the easement ‘that allows for the temporary suspension of deficit reduction contributions (DRCs)’. 

    It should be noted that our guidance does not change the legislative requirements, and that if an employer misses a DRC agreed within the Schedule of Contributions then this creates a breach and a debt. The aim of the guidance is to provide trustees comfort regarding how we may exercise our discretion when considering regulatory action against the trustee for dealing with the on-going breach.

    We monitor all instances where we are notified of failure to pay a DRC, and we engage with trustees where we require further information. To date, we have not considered any instances to be sufficiently unreasonable to warrant the commencement of an investigation by being outside the scope of our published guidance.

  2. We have also been asked to provide the number of investigations that we have launched into suspected abuse of the easement ‘to allow employers with defined benefit pension schemes to take contribution holidays of up to three months’.

    We have assumed that this would be notified to us via Revised Recovery plans which may include a payment holiday as a way of resolving or avoiding any breach that is caused by missing a contribution (including a DRC). We would consider these plans to ensure that they are appropriate in respect of the affordability and sustainable growth of the sponsor.

    As with the first easement covered in this response, we consider all revised recovery plans and engage with trustees where we require further information. Again, we have not to date considered any instances to be sufficiently inappropriate to warrant the commencement of an investigation by being outside the scope of our published guidance.

  3. Finally, we have been asked to provide the number of investigations that we have launched into suspected abuse of the easement ‘for providers to report late/non-payments of contributions after 150 days instead of after 90 days'.

    We have assumed that the request focusses on employers that take an active decision to withhold paying over contributions in the knowledge that they will not be reported to us for 150 days.

    The rationale for an employer to withhold payments of contributions is not something that we capture in our data. However, where an employer is reported to us for late/non-payment of contributions regardless of whether this is after 90 days or 150 days, we would consider taking enforcement activities in line with our published regulatory policy and guidance.
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