The government is consulting on regulations that (a) make changes to the list of employer notifiable events and (b) prescribe the events affecting a DB scheme employer in respect of which a notice and accompanying statement (often referred to as a “declaration of intent”) must be given to the Pensions Regulator (TPR) and the scheme trustees. The regulations are intended to come into force on 6 April 2022.
Changes to the list of employer notifiable events
The regulations remove wrongful trading from the list of employer notifiable events and add two new employer notifiable events:
- A decision in principle by the employer to sell a material proportion of its business or assets.
- A decision in principle by the employer to grant or extend a security over its assets where that grant/extension would result in the secured creditor being ranked above the scheme in the order of priority for debt recovery.
New “declaration of intent” requirements
The Pension Schemes Act 2021 will introduce a requirement for employers to give notice to TPR of certain prescribed events in relation to the employer of a DB scheme and to provide an accompanying statement about the impact of the event on the scheme (often referred to as a “declaration of intent”). A copy of the notice and the accompanying statement must also be given to the trustees of the scheme at the same time that they are given to TPR.
The regulations prescribe the following as events in respect of which a notice and accompanying statement must be given to TPR and the trustees:
- The intended sale by the employer of a material proportion of its business or assets, in respect of which the main terms have been proposed.
- The intended granting or extending of a security by the employer over its assets which would result in the secured creditor being ranked above the scheme in the order of priority for debt recovery, in respect of which the main terms have been proposed.
- Where the employer is a company, the intended change of control of the employer, in respect of which the main terms have been proposed, or where a change of control occurs without a decision to do so having been taken, the change of control of the employer.
The regulations also set out the information to be included in the accompanying statement.
The notifiable events regime and the declaration of intent regime are separate and, where an event will give rise to obligations under both regimes, both obligations must be complied with.
The consultation closes on 27 October 2021.
For a more detailed discussion of the proposed changes, please see our legal update.