You will no doubt recall that, back in February, the Pension Schemes Act 2021 (the “Act”) finally became law. The Act changes the pensions landscape quite drastically and one way it did this was to extend the Pensions Regulator (“tPR”)’s contribution notice (“CN”) regime.

What changed in a nutshell?

tPR could already issue a CN, if it was reasonable to do so, where there had been deliberate avoidance of a s75 debt or an act or failure to act materially affected the likelihood of members receiving accrued benefits.

The Act added two new grounds which made it easier for tPR to issue a CN. Very briefly, these are:

  • the “employer insolvency” test which allows a CN to be issued where, immediately after an act or failure to act, if the employer was to suffer a hypothetical insolvency event triggering a statutory s75 debt, tPR is of the opinion that the act or failure to act materially reduced the amount of the s75 debt which the scheme could recover; and
  • the “employer resources” test which allows a CN to be issued where tPR is of the view that an act or failure to act would have reduced the value of the employer’s resources and this reduction is material relative to the estimated s75 debt in relation to a scheme.

Employer resources

We now have draft Regulations, The Pensions Regulator (Employer Resources Test) Regulations 2021. These Regulations are expected to come into force on 1 October 2021 and the Government has made it clear that they will not have retrospective effect. The Regulations set out what constitutes “employer resources” and how they are valued for the purposes of the new CN ground.

Essentially, when considering an employer’s resources, what will need to be considered are the profits of the employer before tax as stated in the employer’s accounts adjusted for non-recurring and exceptional items (i.e. infrequent or unusual items). When categorising an item as non-recurring or exceptional, and considering any value, tPR will have to have regard to the relevant accounting standards published by the Financial Reporting Council.

If there are no suitable accounts (for example, because the employer is not required to prepare annual accounts under the Companies Act 2006), tPR may determine, calculate and verify the value of the employer resources.

In undertaking any assessment and calculations, tPR must take account of all relevant information and, provided it does so, no further verification is required.

How does this fit into the bigger CN picture?

Whilst the employer resources test widens the grounds for imposing a CN, tPR must still establish that it is reasonable to impose a CN (for example, this could include tPR considering a broader assessment of an employer’s strength rather than just the employer resources calculation).

It is also worth noting that, under the new Act, it will be a criminal offence to fail to comply with a CN. However, there is a statutory defence to both the new grounds for a CN: where a person gave due consideration to the act or failure to act and took all reasonable steps to eliminate or minimise the potential for the act or failure to act to have that impact.

What is likely to happen in practice?

In practice, particularly while the employer resources CN ground is new, I expect that employers will pursue the tPR clearance application route more often. This may happen less once more is known about this new test. Employers will be pleased to hear that tPR is working on a revised Code of Practice 12 (Circumstances in relation to the material detriment test), with associated guidance, to set out the circumstances in which it expects to issue a CN. Watch this space! In the meantime, companies may want to ensure that, where a company in its corporate group participates/has participated in a defined benefit pension scheme, they consider the impact of any material business activity on the pension scheme and keep a record of the reason(s) that the decision to proceed with the business activity, having given such pension scheme due consideration, was made.

The Pension Schemes Act 2021 introduces a framework for a new type of pension scheme – collective money purchase schemes. Also known as collective defined contribution or CDC schemes, this type of pension scheme offers a middle path between traditional defined benefit (DB) and defined contribution (DC) schemes.

Employer and member contributions are fixed, as in a DC scheme. However, investment and longevity risks are borne collectively by the members, rather than being borne exclusively by the employer (as in a DB scheme) or exclusively by the individual member (as in a DC scheme). Members are promised a target retirement income, but this can be adjusted up or down to reflect the scheme’s investment performance and other risks as longevity experience.

The government is currently consulting on draft regulations setting out further detail of the legal framework for CDC schemes. The consultation closes on 31 August.

Continue Reading A third way – collective money purchase pension schemes

DC consolidation has been on the Government’s agenda for some time. Now the DWP has published a call for evidence, suggesting that the push to consolidate will be ramped up.

Consolidation involves winding up small DC arrangements and moving active members and accrued DC pots to larger schemes. Typically the chosen destination will be a master trust – a multi-employer occupational pension scheme which operates on a commercial basis. Master trusts are subject to an authorisation and supervision regime run by the Pensions Regulator.

Continue Reading DC consolidation: large is beautiful?

In episode 208 of our Employment podcast, Christopher Fisher is looking at two recent discrimination cases dealing with two important issues – will interim relief remedies be introduced for discrimination claims and will gender-critical beliefs be protected as philosophical beliefs.  One case is from the EAT and one from the Court of Appeal.  You can listen to it here: UK Employment Law | Perspectives & Events | Mayer Brown

HMRC has published information on the use of unfunded pension arrangements which are set up in an attempt to avoid corporation tax, income tax and National Insurance (“NI”) contributions.

If you think you have put in place such an unfunded pension arrangement, or are considering setting up an unfunded pension arrangement in the future, you may find the information helpful in understanding the tax treatment that will be applied to that arrangement.

Continue Reading Disguised remuneration: HMRC information on tax avoidance using unfunded pension arrangements

The Pensions Regulator has published its annual funding statement for occupational defined benefit (“DB“) pension schemes.   The statement is relevant for trustees and employers making decisions on scheme funding. It provides wider guidance on covenant monitoring due to the impact of COVID-19 and climate change risks. It highlights the need for employers to provide detailed financial projections to assist trustees in understanding the impact of COVID-19 and in managing future unexpected events.


Aimed at schemes with valuation dates between 22 September 2020 and 21 September 2021 as well as schemes undergoing significant changes that require a review of their funding and risk strategies.


Confirmation that current valuations will be regulated under existing legislation and guidance as the new DB funding code of practice is not expected until late 2022.

Key messages

  • Contingency planning – stress testing or scenario planning for possible future economic environments should be considered particularly for schemes experiencing any continued material impact caused by COVID-19.
  • Post-valuation experience – can be considered but where allowance has been made for positive post-valuation experience the expectation is that any material negative post-valuation experience will be considered in future valuations.
  • Mortality – uncertainty relating to COVID-19, including that the long-term impacts will take time to emerge, is noted. If the decision is made to materially weaken existing mortality assumptions trustees should consider putting in place monitoring and contingency plans if those revised assumptions are not met in practice.
  • Affordability and deficit recovery contributions – where employers continue to request liquidity support through reduced contributions, trustees are expected to obtain suitable mitigations which, could include; all dividends to stop, equitable treatment of the scheme with other creditors and covenant enhancing measures i.e. security or guarantees.
  • Managing risk, including climate risks – continued focus on integrated risk management (IRM) of the employer’s covenant, investment risks and scheme’s funding plans. The impact of climate change on IRM should be proactively considered. The Regulator will be looking at disclosures in the statement of investment principles and implementation statement to monitor climate change activity.
  • Corporate activity – based on the expectation that there will be an increase in corporate activity as the recovery from COVID-19 progresses, trustees should be prepared and ready to act. To facilitate this, employers are expected to inform trustees early and to keep them informed. Employers should also note that trustees are expected to take a rigorous approach and to negotiate mitigation where relevant whether a valuation is underway or not.


While the Regulator is clearly sympathetic to the challenges posed to employers and trustees by COVID-19, there is a clear expectation to address these, and the climate change obligations, through clear and measurable contingency plans.

Data regarding employment tribunal cases for the latest quarter (January to March 2021) has been published by the Ministry of Justice. The interesting statistics show, when compared to the same period in 2020:



  • Receipts of single tribunal claims decreased by 13%, to 9,100 claims, with disposals also decreasing by 14%;
  • The tribunal’s outstanding caseload increased by 39%;
  • Receipts of multiple tribunal cases have increased 14%, to 15,000 claims, with disposals decreasing by 34%.

ACAS have also recently published its early conciliation (EC) and employment tribunal data for England, Scotland and Wales for the period April to December 2020. Headline results show:

  • Over 60% of EC notifications did not materialise into an employment tribunal claim;
  • At least 77% of ET1s filed by Claimants did not proceed to a hearing;
  • Cases such as discrimination and whistleblowing were more likely to progress than others.

The data above shows that Claimants continue to bring the more complex cases involving multiple claims to the employment tribunal. Whilst the majority of cases are withdrawn (presumably settled), it is these cases which are the most likely to proceed.  It is anticipated that the number of cases brought in the employment tribunal may rise going forward as a result of the pandemic’s impact on businesses and the furlough scheme ending later this year. An increase in redundancies can be expected and, therefore, so can cases involving unfair dismissal as a result.



In an eagerly anticipated update, the Home Office has announced that the Covid-19 adjustment to the right to work check will no longer end on 20 June 2021 but will be extended to 1 September 2021.  Read here for our full blog post:

The Home Office has published a revised Code of Practice on preventing illegal working, covering the changes to the right to work check requirements for EEA citizens which come into effect on 1 July 2021.  In this article, Mayer Brown’s James Perrott looks at the changes that the Code introduces, how this will affect UK employers, and the areas of continued uncertainty.