The Pensions Regulator
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Final revised clearance guidance published
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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