Rentokil Initial Pension Trustee Limited failed to complete 2012 and 2015 valuations of the Initial Hospital Service Limited No.1 Pension Scheme by their respective deadlines (July 2013 and July 2016).
DB scheme trustees are required to complete valuations every three years and, if the scheme is in deficit, they must submit a recovery plan and a schedule of contributions to TPR.
As part of its clearer, quicker, tougher approach, since April 2017, TPR has issued nine Warning Notices for late valuations.
Nicola Parish, TPR’s Executive Director of Frontline Regulation, said: “Agreeing a triennial valuation is a key priority for the trustee of a scheme and its sponsoring employer. It allows us to check the health of a scheme and its ability to provide members with their expected retirement benefits.
“We are monitoring valuation due dates more regularly and this fine shows we will take tough action sooner to put things right where breaches occur.”
TPR was informed the reason for the delay in completing both Initial Hospital Service valuations was a planned merger with a separate scheme run by sponsoring employer, Rentokil Initial Plc.
TPR repeatedly advised the trustee that the proposed merger was not a valid reason for failing to comply with the statutory requirements and they should progress with agreeing both valuations with the employer.
When the proposed merger failed to happen and the valuations had not been submitted by the end of 2017, TPR decided to take formal action.
TPR’s Determinations Panel (DP) upheld the recommendation that the trustee should be issued with a £25,000 fine under section 10 of the Pensions Act 1995 for its failure to take all reasonable steps to complete the valuations. The DP’s findings are set out in a Determination Notice
The DP’s decision highlights a “flagrant disregard by the trustee of its obligation and the role of the regulator, putting members at risk”. The scheme has approximately 140 members.
The Trustee did not dispute the DP’s findings and the fine has been paid.
In addition, TPR also issued an Improvement Notice to the trustee and a Third Party Notice to the sponsoring employer in April under sections 13 and 14 of the Pensions Act 2004, which required both outstanding valuations to be submitted to TPR by the end of May. Both valuations have been received.
Nicola Parish commented: “The behaviours in this case were so severe that, not only did we issue Improvement Notices, we also recommended to the Determinations Panel that a fine should be imposed at a level that would be likely to improve behaviours in the future and be an effective deterrent for other trustees. We are pleased the Determinations Panel agreed with our approach.”
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