Under ‘Part 3’ of the Bill, the Pensions Regulator will have new and widely-drawn powers to issue Contribution Notices to corporate targets and individuals, forcing them to make additional contributions into their pension scheme. Concerns had been expressed across the industry that these powers could have retrospective effect, being used to challenge decisions made long before the Bill was put into law.
This is because, in common with existing contribution notice powers, the new powers apply in relation to actions taken up to six years before the Regulator gives a warning notice of its intention to issue the contribution notice.
Without clarification, there was a risk that this part of the Bill could operate in such a manner that the Regulator would initially be able to look to events that happened as far back as 2015 – years before the Bill was introduced to Parliament and well before the Government set out its initial proposals in this area.
However, in answer to a written question from former pensions minister, Labour MP Angela Eagle, Guy Opperman has now confirmed that “none of the provisions in Part 3 of the Bill will be retrospective”. More specifically, he says that the powers will only apply to “…schemes where the act occurs, or in the case of a series of acts commences, after the powers come into force”.
The news has been welcomed by LCP partner and head of research David Everett he said: “The ministerial statement is very welcome news and is consistent with how previous powers in this area were introduced. Corporate decision makers should not be in a position of facing new penalties for actions taken in the past”.
But David Everett said that the industry still needed further guidance on how the new powers will be used, and in particular on how having a ‘material impact’ on pension scheme funding will be defined. He added:
“What is disappointing is that there is no undertaking that the Regulator will provide guidance on the new Contribution Notice tests. But it will surely need to, in order to explain when certain ‘materiality’ provisions of the legislation are likely to operate”
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