Hogan Lovells

Key Dates

Consultation response issued on 11 February 2019.

Consultation issued on 26 June 2018.

White Paper, "Protecting Defined Benefit Pension Schemes", issued on 19 March 2018.


Summary

The DWP has issued a response to its consultation in June 2018 on strengthening the powers of the Pensions Regulator (tPR).  The government intends to legislate to implement its proposals "as soon as Parliamentary time allows".

Notifiable events framework: additional notifiable events

The range of notifiable employer-related events will be extended to include the following:

Wrongful trading of the sponsoring employer will cease to be a notifiable event, since experience has shown that wrongful trading is highly unlikely to be made public, regardless of any notification duty.

Following consultation, the government has decided against extending the notifiable events framework to include:

The government will consult on details of the above changes to the notifiable events regime, plus on any changes to scheme-related notifiable events.  The Regulator is expected to update its guidance and to consult on a revised code of practice.

Notifiable events: timing of notification

Currently, tPR must be told of notifiable events as soon as reasonably practicable after they have occurred.  Following consultation, the DWP plans to work with the Regulator and industry to identify where earlier notification of notifiable events would be beneficial.

Declaration of intent

The government will legislate to introduce a "Declaration of Intent" requirement, triggered when one of the following occur:

A declaration of intent will need to be addressed to the trustees from the transaction's corporate planners (usually the board of directors) and shared with tPR.  Further consideration will be given to the content of the declaration.  According to the June 2018 consultation documents, the declaration should:

Following consultation, the government intends to work with the Regulator to identify a flexible approach which takes account of the particular circumstances of individual transactions.  Expectations on timing for both notifiable events and the declaration of intent will be set out in guidance, and the government does not currently plan to legislate for when the declaration should be shared with trustees and the Regulator.

Voluntary clearance

The Regulator is expected to review its clearance guidance and to clarify or expand certain areas, including:

The consultation response makes clear that there are no plans to replace clearance with the declaration of intent.

Sanctions

The DWP intends to legislate to widen the circumstances in which fines and criminal proceedings may be used, so that the Regulator or the courts will be able to impose the most appropriate penalty, including:

Potential targets would include all those with responsibility for a pension scheme, including directors, sponsoring employers, associated and connected persons and (in some circumstances) trustees.

Moral hazard powers

The government intends to take forward proposals to strengthen the contribution notice (CN) regime, including the following:

The government intends to proceed with the following proposals to strengthen the financial support direction (FSD) regime:

Following consultation, the government has decided not to take forward proposals to:

Information gathering powers

Proposals concerning the Regulator's information gathering powers were not included in the June 2018 consultation paper, but are covered in the February 2019 consultation response.

Stand-alone interview power

The government has decided to proceed with granting the Regulator a stand-alone power to interview, not dependent on the prior issue of a notice under section 72 Pensions Act 2004. Points to note include the following:

Inspection power

The government will proceed with the proposal to widen the Regulator's inspection power, so that it may enter any premises where documents or records are kept which are relevant to the exercise of any of the Regulator's functions.  At present, sections 73 and 74 Pensions Act 2004 give the Regulator power to inspect for the purpose of investigating whether certain provisions of pension legislation are being complied with, and in relation to an employer's obligations.

Fixed and escalating civil penalties



Date Accessed: 28/05/2022