Trustee Guidance: Pension Scheme Status
Introduction
The Insolvency Practitioner must notify the Pension Protection Fund, the Pensions Regulator and the trustees of the rescue status of an occupational pension scheme as soon as possible. It is not necessary for the Insolvency Practitioner to wait for the validation of the section 120 insolvency event notice before issuing a scheme status notice although the Pension Protection Fund will not determine whether to approve the scheme status notice until after we have confirmed whether an assessment period has begun.
For those pension schemes whose sponsoring employer cannot have a normal insolvency event, for example some public bodies and unincorporated charities, the Board has responsibility for confirming the scheme status. In such circumstances the caseworker will be able to provide more detailed guidance.
Determining the scheme status is a key point in the assessment of the scheme because if a scheme is rescued then the assessment period will terminate and the Pension Protection Fund will cease to be involved with the scheme. In contrast the effect of the scheme failure becoming binding is that the debt due to the scheme from the employer ceases to be contingent and some key elements of the assessment period should be progressed.
Objectives
To determine whether:
- the scheme has been rescued
- a scheme rescue is not possible
- insolvency proceedings stayed or come to an end and a decision cannot be made
Key Activities for the Insolvency Practitioner
Issue a notice confirming one of the following:
- The scheme has been rescued
- A scheme rescue is not possible
- Insolvency proceedings stayed or come to an end and a decision cannot be made
Guidance for Insolvency Practitioners (Part 3) has more detail on the responsibilities of the Insolvency Practitioner and the criteria for each rescue status.
The situation is potentially more complicated with multi-employer schemes and further guidance is available in the Guidance for Insolvency Practitioners (Appendix 3) and from your caseworker.
Key Activities for Trustees
Make the Pension Protection Fund aware of any concerns they have about the Insolvency Practitioner's scheme status notice
Key Activities for the Pension Protection Fund
Take action where there is reason to believe a notice ought to have been issued in respect of an eligible scheme and yet a notice has not been received.
Issue a determination notice approving or not approving the scheme status notice:
- Where the scheme has been rescued and a withdrawal notice has been issued, the assessment period will terminate when that notice becomes binding
- Where a scheme has not been rescued and a scheme failure notice has been issued, the assessment period will continue.
- Where the insolvency practitioner has issued a notice confirming that a decision cannot be made, and that notice becomes binding, the Pension Protection Fund must consider whether another insolvency event is likely to occur in the next six months:
- if this is unlikely, the Pension Protection Fund will issue a withdrawal notice terminating the assessment period; and
- if the Pension Protection Fund has not reached such a decision and six months has passed without another insolvency event, the Pension Protection Fund is then required to issue a withdrawal notice, terminating the assessment period; or
- if an insolvency event is likely to occur, and because the pension scheme is still in an assessment period, the process for determining the pension scheme status re-starts when the Pension Protection Fund is notified of a further insolvency event
Once 28 days has elapsed, if no requests for review have been received, then the Pension Protection Fund will confirm that the determination has become binding.
Created May 2006
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