The Pensions Regulator (the Regulator) recently used its powers under the Pensions Act 1995 to appoint an independent trustee to the exclusion of all other trustees of the scheme. The employer was required to pay the fees and expenses relating to the appointment.
The Regulator decided to use its powers because:
- it had become aware of proposals by the participating employers’ directors (some of whom also acted as trustees of the scheme) to “strip out certain assets” from the principal employer and then buy-back the remaining assets through a pre-packaged arrangement but leaving behind the pension liabilities;
- the trustees held important positions in the participating and principal employers which gave rise to a conflict of interest that had not been properly managed; and
- the proposals to “strip out” certain assets and buy back other assets posed a risk to the scheme members and Pension Protection Fund (PPF).
The Regulator used its special procedure, which is used in urgent cases, to appoint the independent trustee because it felt that issuing a warning notice (as is required under its standard procedure) would have created an immediate risk to the members and assets of the scheme.
In this case the Regulator had received evidence that the employer was technically insolvent although trading legally. It is not clear why the Regulator felt that the proposals posed a risk to scheme members and the PPF over and above the risk of employer insolvency already present.