Section 69A of the Pension Schemes Act 2021 (the Act) includes provisions seeking to provide The Pensions Regulator (TPR) and trustees with additional early warnings of transactions that might affect defined benefit schemes by expanding the current notifiable events regime. However, the detail of the additional employer-related events was left to regulations.
Under the Strengthening TPR’s Powers: Notifiable Events (Amendments) Regulations 2021 (the Draft Regulations), two new notifiable events have been introduced. These are:
- a decision in principle by the employer to sell a material proportion of its business or assets; and
- a decision in principle by the employer to grant or extend a relevant security over its assets, where that would result in the secured creditor ranking above the pension scheme in the order of recovery.
In addition, one of the existing notifiable events has been amended so the underlying transaction is notifiable at an earlier stage, meaning that notification to TPR is required when a decision “in principle” is made to relinquish control of the sponsoring employer (not when the decision is made).
A consultation on the Draft Regulations took place between 8 September 2021 and 27 October 2021.
During the consultation, industry participants such as the Association of Consulting Actuaries said that guidance on TPR’s extended employer-related notifiable event powers was needed as soon possible to coincide with regulations. Such guidance has not yet been published.
Industry experts had hoped the Department for Work and Pensions would publish final regulations in response to the consultation during early April 2022 in order for the regulations to come into force in April. It is also hoped that the final regulations will address the various concerns which have been raised with the Draft Regulations. However, the final regulations are yet to be published. In light of this delay, it is expected that by the time the final regulations are published, and are followed up by guidance from TPR, it is likely to be autumn before the new rules come into force. Giving that the timing and content of the regulations are now uncertain, it is difficult for sponsors of defined benefit schemes to plan ahead to ensure that all legal notification requirements are followed in respect of any corporate activity and therefore careful monitoring is required.
About Eleanor Hart
Eleanor advises on a broad variety of pension matters, both transactional and general advisory, acting for trustees and corporate sponsors. She has extensive experience advising clients on the pension and employment aspects of acquisitions and disposals (both UK and cross-border). She has been involved in numerous high-profile deals with complex pension aspects as well as innovative pension restructurings, including the first ever pensions deficit for equity swap. Eleanor is a member of the Association of Pension Lawyers and is currently on the Education and Seminars Committee.