The Pensions Act 2004 provides us with a range of powers - as well as those we inherited from our predecessor Opra - to enable us to meet our objectives. We use these powers flexibly, reasonably and appropriately, with the aim of putting things right and keeping schemes on the right track for the long term.
Our powers fall into three broad categories:
- Investigating schemes: how we gather information to help us identify and monitor risks.
- Putting things right: what we can do where problems have been identified.
- Acting against avoidance: how we will ensure that employers do not sidestep their pension obligations.
We collect data through the scheme return. We also expect to receive reports of significant breaches of the law from 'whistleblowers', and reports of notifiable events from trustees and employers.
Trustees or scheme managers are also responsible for notifying us promptly of changes to 'registrable' information such as the scheme's address, details of trustees, or the types of benefit provided by the scheme.
We also expect to receive reports where a scheme is unable to comply fully with the new scheme funding framework. If a scheme has a shortfall, we expect to receive scheme funding information.
Documents and other information
In addition, we are able to demand documents (or other information) from trustees and employers, among others. We can only demand information that it is relevant to our work as a regulator.
Where we decide that action must be taken to protect the security of members' benefits, we have a range of options available. The action we take will, of course, depend on the circumstances of the problem. These are some examples of the regulatory action we may take:
- We can issue an improvement notice to individuals or companies, or a third party notice, requiring specific action to be taken within a certain time.
- We can take action, on behalf of a scheme, to recover unpaid contributions from the employer if the due date for payment has passed.
- Where wind-up is pending and we believe that members' interests may be at risk, we can issue a freezing order. This order temporarily halts all activity within the scheme, so that we can investigate concerns and encourage negotiations.
- We can prohibit trustees who we do not consider to be fit and proper persons for the role.
- Where breaches have occurred, we can impose fines.
- We can prosecute certain offences in the criminal courts.
We have powers to act where we believe that an employer is deliberately attempting to avoid their pension obligations, leaving the Pension Protection Fund to pick up their pension liabilities. To protect the benefits of scheme members, and to reduce the Pension Protection Fund's exposure to claims for compensation, we may issue any of the following:
- Contribution notices. These allow us to direct that, where there is a deliberate attempt to avoid a statutory debt, those involved must pay an amount up to the full statutory debt either to the scheme or to the board of the Pension Protection Fund.
- Financial support directions. These require financial support to be put in place for an underfunded scheme where we conclude that the sponsoring employer is either a service company or is insufficiently resourced.
- Restoration orders. If there has been a transaction at an undervalue involving the scheme's assets, these allow us to take action to have the assets (or their equivalent value) restored to the scheme.
A clearance procedure is available for anyone who wishes to confirm that they will not be subject to either a contribution notice or a financial support direction following a proposed transaction.