The Government has issued a response to the April 2008 consultation (see our May 2008 briefing) on the proposals to change the Pensions Regulator's moral hazard powers (contribution notices and financial support directions). The changes have now been tabled as amendments to the Pensions Bill.
The major changes affect contribution notices: a new "material detriment" test (where actions or failures have a materially detrimental effect on the likelihood of members receiving their benefits); the removal of the "lack of good faith" requirement; a revised test of reasonableness; and a proposed new code of practice from the Pensions Regulator, for which the Pensions Regulator has issued draft content. There are also changes in relation to bulk transfers and the test for imposing financial support directions.
The principal amendments are to have retrospective effect from 14 April 2008. Otherwise the changes will come into force when the Pensions Bill receives Royal Assent, except for the new material detriment test, which will take effect when the Code comes into force. The Regulator's statement of 25 April on how it would operate its powers in the interim will continue to have effect until the new legislative provisions come into force.
For further details see our briefing issued earlier this month.