​The Ministry of Business, Innovation and Employment (MBIE) is proposing law change after the Court of Appeal ruled that KiwiSaver funds are beyond the reach of the Official Assignee.

The effect of the ruling is to provide a higher level of protection for KiwiSaver balances than for other forms of retirement savings.

MBIE is seeking feedback on a range of options to create a uniform policy approach to the use of retirement savings in bankruptcy.

Submissions close on 30 September 2016. We encourage you to make a submission.

Background

Earlier this month, a Wolverhampton-based financial advisor was banned by the Insolvency Service for eight years after his firm provided poor pension investment advice, resulting in clients losing £7 million.

Background

Introduction

These key action points take into account the UK Pensions Regulator's recent statement on COVID-19. Trustees and employers should continue to monitor further updates from the Regulator.

Defined benefit (DB) arrangements

The Pension Schemes Bill 2019 is causing a marked degree of consternation in the restructuring community. The proposed legislation introduces new offences that can be prosecuted in the criminal courts and further moral hazard powers that are likely to significantly reduce the directors’ and insolvency practitioners’ ability to provide commercial and creative solutions to creditors of financially stressed companies.

At clause 107, the Bill introduces two new criminal offences and below we address the concerns these cause:

The Pension Schemes Bill [HL] 2019-20 (Bill) was re-introduced before Parliament on 7 January 2020. Among its proposed amendments to the Pensions Act 2004 (Act) are new criminal offences for failing to comply with a contribution notice, avoiding employer debt, conduct risking accrued scheme benefits, an expansion of the moral hazard powers and an extension of the ‘notifiable events’ framework. The Government’s stated intention is to “ensure that those who put pension schemes in jeopardy feel the full force of the law“.

Pension Schemes Bill – Additional hurdle for English law restructurings?

The intention was that the Pension Schemes Bill would enhance the Pensions Regulator’s powers to respond earlier when employers fail to take their pension responsibilities seriously, targeting “reckless bosses who plunder people’s pension pots”. However, the new criminal offences proposed as part of the Bill may inadvertently create additional hurdles for English law restructurings, making them potentially more expensive and difficult.

The Pension Schemes Bill promised in the Queen’s Speech has been introduced into Parliament. At nearly 200 pages the Bill is comprehensive, wide-ranging and ticks many of the boxes on the Pensions Regulator’s wish list. It substantially reflects the Bill which briefly appeared in the autumn: this time, it seems likely to make it to the statute book. The Bill as drafted has potentially far-reaching implications, if it is passed substantially in its current form.

Transactions and restructuring

The high street is experiencing a rash of administrations, but could regulators fix the mess?

In The Sun Also Rises, Ernest Hemingway neatly summed up how bankruptcy happens. It occurs two ways: “Gradually. Then suddenly.” The British retail landscape has seen a flurry of such calamities. Thomas Cook, House of Fraser, L.K.Bennett, Debenhams, Links of London, Goals Soccer Centres, Mothercare and Jack Wills all struggled for periods before collapsing into various forms of administration.

Sheriff McCormick at Glasgow Sheriff Court has been asked to rule on this specific point in the recent case of Gary John Cook v The Accountant in Bankruptcy [2019] SC GLA 82, which he answered in the affirmative.

This is of particular relevance for trustees in sequestration when the debtor has paid into a pension scheme and is intending to apply for a drawdown of the proceeds from that scheme, following the appointment of the trustee.

The facts are fairly straightforward: