Help is at hand for insolvency practitioners (IPs) who need clarification on the Regulator’s views on scheme trustee appointments and statutory notices. The Pensions Regulator recently released a statement intended to assist IPs to understand these two areas which are of particular relevance to them.
The statement deals with scheme trustee appointments in four areas:
- Employer insolvency: The Pensions Regulator highlights the fact that, under section 23 Pensions Act 1995, IPs have the power to appoint a trustee to a scheme but it is decided on a discretionary basis and will depend upon the scheme’s circumstances.
- IPs and trustees of an employer’s pension scheme: The statement lists some benefits to the IP, scheme members and creditors of the employer, when an IP considers the following two factors:
- exercising any employer power to appoint a new trustee
- acting as a trustee (on behalf of the insolvent employer where the employer was a trustee).
- IP appointing a trustee: The statement provides a useful breakdown of the criteria required to satisfy an IP when appointing a trustee. A trustee must:
- be able and willing to act
- be ‘independent’ to the extent that the selected trustee has no connections with the scheme, the employer or the IP
- be capable of discharging trustee duties
- charge professional fees which are reasonable (if indeed they charge fees at all). It is suggested that, if they do charge, the IP should investigate a fixed-fee appointment.
- IP acting as trustee: The statement provides examples where, although IPs are usually capable of carrying out the employer’s trustee function, there may be reasons why it is neither practical nor appropriate to do so.
The second point covered in the statement is the statutory obligations of the IPs to notify. It clarifies the ambiguity surrounding the obligation to notify under section 22 Pensions Act 1995 which applies, for example, where an IP begins to act in relation to the scheme’s employer. It also seeks to clarify the position on the duty under section 120 Pensions Act 2004 which applies where there is an insolvency event.
In summary, the Pensions Regulator states that, although it is the case that some events could trigger both these obligations, they each apply separately and therefore both need to be complied with. The Pensions Regulator suggests that, if IPs are unclear about when the obligations apply and what is required to comply with them, they obtain legal advice.