The Pensions Regulator (the "Regulator") has published a statement to help banking, insolvency and restructuring professionals understand its approach to its Financial Support Direction ("FSD") powers in insolvency situations.
This summer has seen several pension issues making the news. They show how essential it is for employers and trustees to keep abreast of how developments impact on their arrangements.
Jay Doraisamy looks at five areas which have made the headlines this summer:
Financial support directions and insolvency: the Regulator's statement
The Pensions Regulator has today issued a Statement on its power to issue financial support directions (“FSDs”) against companies after an insolvency event has occurred. The Statement follows longstanding concerns of insolvency practitioners, which have arisen from ongoing court proceedings brought by the Lehman Brothers and Nortel administrators.
Background
In Raithatha v Williamson [2012] EWHC 090 Ch, the English High Court was asked to decide whether a bankrupt’s entitlement to a pension, which he had not yet elected to receive, should be subject to an order for income payment.
In September 2010, the Determinations Panel of the Regulator (the "DP") issued financial support directions ("FSDs") against six companies in the Lehman Brothers Group, but determined that no FSDs would be issued against 38 other companies in the group. The trustees of the Lehman Brothers Pension Scheme appealed the decision not to issue FSDs against these 38 companies to the Upper Tribunal. However, the companies applied for the trustees' appeal to be struck out.
- Transfers
From April 2012 it has been possible to make transfer payments from contracted-out to contracted-in pension plans. Many members have a statutory right to such a transfer (irrespective of contrary restrictions in pension plan rules). Legislation sets down a number of member safeguards that must be met. Any transfer is subject to a receiving scheme being willing to accept it. Trustees should be aware of the impact on administration and member communications.
Those thinking that the trials and tribulations of the recession may have passed them by and that, if all else failed, at least the pension was safe, may have to think again following two recent court decisions in which pensions came under attack from creditors and trustees in bankruptcy.
The vexed question of whether a future right to receive a pension can be attached to satisfy a judgment, or can be claimed by a trustee in bankruptcy, has long since troubled the courts.
BESTrustees v Kaupthing Singer & Friedlander [2012] EWHC 629 (Ch) (High Court Chancery Division 16 March 2012)
Background
There have been rumours in the pensions industry for a while that the Bonas case was not in fact the first contribution notice (CN) case to be decided by the Regulator's Determination Panel (Panel). In March 2012 these rumours proved to be true when the embargo in the case of the Desmond Pension Scheme was lifted and details were published for the first time. This speedbrief considers the Panel's determination to impose contribution notices on two individuals (Mr Desmond and Mr Gordon) and the Upper Tribunal's decision on various preliminary iss