Further to its statements in October 2008 and February 2009 setting out its general position to trustees and employers facing depleted asset values and increased scheme deficits in the current economic climate, the Regulator has issued a further statement, Alert to risks in the downturn.
The earlier statements reassured trustees and employers that the funding regime is flexible enough to cope with the impact of the downturn; that the Regulator will continue to regulate funding on a scheme specific basis; and that trustees can renegotiate recovery plans to repair scheme deficits, as the best security for a pension scheme is a viable employer. The Regulator’s view on these issues remains unchanged.
The new statement refers to certain activities which may be more likely to occur during an economic downturn and which would give the Regulator cause for concern. It therefore draws attention to the whistleblowing duty on those involved in running work-based pension schemes (s70 Pensions Act 2004 and Code of Practice No. 1 Reporting breaches of the law). In particular, if there is any concern about the following activities/behaviour, this should be reported to the Regulator:
- Dishonesty and fraud – e.g. targeting scheme members to access their pension assets through trust-busting or pension liberation activities
- Behaviour which unacceptably increases risks to members’ benefits, the PPF and all levy-paying schemes - e.g. avoidance of employer debt, inappropriate transfers, employer-related self-investment and poor practice associated with transfer incentive exercises.