Looks at the Pensions Regulator's powers to protect pension scheme benefits.Jump to full report >>
The Pensions Regulator (TPR) has powers to act where it believes an employer is deliberately attempting to avoid their pension obligations, leaving the Pension Protection Fund to pick up their pension liabilities. To protect scheme benefits and reduce the exposure of the PPF to claims for compensation, it can issue any of the following;
A clearance procedure is available for anyone who wishes to confirm that they will not be subject to either a contribution notice or a financial support direction following a business transaction.
In its December 2016 report on DB schemes, the Work and Pensions Select Committee recommended that TPR should be reformed to a “nimbler, more proactive regulator” able to intervene sooner when difficulties become apparent. Recommendations included that:
In its February 2017 Green Paper, Security and Sustainability in Defined Benefit Pension Schemes, the Government said that the “overarching view of virtually all stakeholders is that the regulatory regime for DB pensions is satisfactory” but that there might be a case for “limited changes to the regulation of DB provision to help employers and trustees manage liabilities more effectively in some of the circumstances that exist” (para 139-40). It asked for views on reforms that had been suggested, including:
In July 2017, the Government said it would publish a White Paper later in the year setting out “proposed next steps on what reform is needed to support the sector.” (HCWS48, 13 July 2017).
This note looks at the rationale for the introduction of these ‘anti-avoidance’ powers, how they have been used in practice and whether changes are needed.