In this note we outline the argument for adding a new, flexible time limit (or ‘limitation period’) for the Pensions Regulator to issue a Financial Support Direction (FSD) or a Contribution Notice (CN), its two strongest enforcement measures.

The additional time limit for the Regulator to act would be linked to the state of its knowledge. It would allow the Regulator to act within three years of having ‘sufficient awareness’ (see below) of the facts, with a long-stop of fifteen years.

The new time limit would be in addition to the existing fixed time limits of two years for an FSD and six years for a CN.

This proposal supports the Regulator’s work towards its statutory objectives.

The current fixed limitation periods – when time starts to run

The key point about the current fixed length limitation periods is that time can start to run before the Regulator or the pension scheme trustees are aware of the facts on the ground that mean an FSD or CN could be issued.

The result is that, for lack of knowledge of the facts, the Regulator can miss the opportunity to use its powers to make what might be a large claim on the scheme employers.

Contrast how limitation works where there is latent damage

Where there has been latent damage (damage that is not immediately apparent), legal action must start within:

  • six years from when the damage was suffered
  • three years from when the claimant knows, or ought reasonably to have known, that damage was suffered (in this note we call this state of knowledge ‘sufficient awareness’), subject to a long stop of fifteen years from the date when the damage was actually suffered.

Evidently, having a secondary time limit based on the state of someone’s knowledge could keep open the possibility of legal action significantly beyond a relatively brief initial fixed period.

As matters stand in the pensions context, corporates could arrange their affairs short of being required to inform the trustees or the Pensions Regulator and the deadline for bringing action for a FSD or CN could expire without the trustees or the Regulator becoming aware either was ever a possibility