The Pensions Regulator (the Regulator) has finalised its code of practice on its extended powers to issue Contribution Notices (CNs) under the new “material detriment” test. The code of practice has been laid before Parliament and is expected to come into force in summer 2009.
The code of practice lists the below circumstances as situations where the Regulator may issue a CN under the new material detriment test:
- a transfer of the scheme out of the jurisdiction;
- a transfer of the sponsoring employer out of the jurisdiction or the replacement of the sponsoring employer with an entity that does not fall within the jurisdiction;
- where sponsor support is removed, substantially reduced or becomes nominal;
- a transfer of liabilities of the scheme to another pension scheme or arrangement which leads to a significant reduction of the:
- sponsor support in respect of these liabilities; or
- funding to cover these liabilities.
- a business model or the operation of the scheme which creates from the scheme, or which is designed to do so, a financial benefit for:
- the employer; or
- some other person,
where proper account has not been taken of the interests of the members of the scheme, including where risks to members are increased.
Once the code receives Parliamentary approval, the Regulator will have the retrospective power to issue CNs under the new material detriment test in relations to acts or failures to act that occurred on or after 14 April 2008. For background on these new changes see EPB briefing 177: Proposed changes to the Pensions Regulator’s powers to issue contribution notices and financial support directions – November 2008.