THE PENSIONS
REGULATOR News Release (Ref:PN/08/06) issued by The Government News
Network on 20 March 2008
Following
industry-wide consultation, the Pensions Regulator has today
published updated guidance to support trustees and employers
dealing with events that may impact upon their pension scheme, and
when applying for a clearance statement.
The guidance has been updated taking into account our experience
of operating clearance, and reflects the way that both the
regulator and the market have developed since the process was
introduced in April 2005.
While the revised guidance does not change our fundamental
approach, the key differences are:
* an emphasis on a principles-based approach encouraging parties
to focus on the real impact of the event on the scheme - as our
experience shows that simple tests and categories often do not
reflect the complexity of corporate transactions;
* updated guiding principles trustees and employers should apply;
* more detailed information on the types of mitigation that could
be considered;
* removal of type B and C events as these were rarely used;
* division of type A events into employer or scheme-related; and
* updated information on how to decide upon relevant deficit.
The guidance provides information about: identifying type A
events and assessing the impact of an event on a pension scheme;
actions applicants and trustees should take during the clearance
process including mitigation and negotiation; and applying to the
Pensions Regulator for clearance.
Tony Hobman, chief executive of the Pensions Regulator, said:
"This guidance has been created in line with our commitment
to operate in a risk-based and proportionate manner and emphasises
a principles-based approach to regulation.
"The development of this revised guidance involved
consultation with a wide range of people. We are very grateful for
the many helpful and constructive comments we have received."
- ENDS -
Notes for Editors:
1. Alongside the guidance, the regulator has also published a
consultation report. The report describes the consultation that
has taken place on this guidance, and explains how the
consultation has shaped the final version.
2. 'Clearance' is the term used to describe the
voluntary process of obtaining a clearance statement from the
regulator. A clearance statement gives assurance that, based on
the information provided, the regulator will not use its
anti-avoidance powers to issue, to the applicants for clearance,
either contribution notices or financial support directions in
relation to a defined benefit occupational pension scheme and a
particular event. Events include transactions, agreements,
decisions, other acts and failures to act.
3. A contribution notice requires payment of a specified sum to
be paid into a defined benefit scheme. A financial support
direction requires financial support to be put in place for the scheme.
4. While the guidance is aimed primarily at professional
advisers, they should ensure that all parties involved in a
possible type A event, including employers and scheme trustees,
are familiar with the content and the spirit of the guidance.
5. The Pensions Regulator is the regulator of work-based pensions
in the UK, with wide-ranging and flexible powers under the
Pensions Act 2004. The powers of the Pensions Regulator include
the ability to:
* collect more detailed scheme information;
* issue improvement notices and third party notices, enabling the
regulator to ensure problems are put right;
* freeze a scheme that is at risk, while the regulator
investigates; and
* prohibit trustees who are judged not fit and proper to carry
out their duties, or appoint independent trustees.
The Pensions Act 2004 also imposes a statutory obligation on
'whistleblowers' to report suspected breaches of the
legislation to the regulator.
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