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Contribution notices where avoidance of employer debt
Malcolm Wicks
NC39
To move the following Clause:—
'(1) This section applies in relation to an occupational pension scheme other than—
| (a) | a money purchase scheme, or |
| (b) | a prescribed scheme or a scheme of a prescribed description. |
(2) The Regulator may issue a notice to a person stating that the person is under a liability to pay the sum specified in the notice (a "contribution notice")—
| (a) | to the trustees or managers of the scheme, or |
| (b) | where the Board of the Pension Protection Fund has assumed responsibility for the scheme under Chapter 3 of Part 2 (pension protection), to the Board. |
(3) The Regulator may issue a contribution notice to a person only if—
| (a) | the Regulator is of the opinion that the person was a party to an act or a deliberate failure to act which falls within subsection (4), |
| (b) | the person was at any time in the relevant period— |
| (i) | the employer in relation to the scheme, or |
| (ii) | a person connected with, or an associate of, the employer, and |
| (c) | the Regulator is of the opinion that it is reasonable to impose liability on the person to pay the sum specified in the notice. |
(4) An act or a failure to act falls within this subsection if—
| (a) | the Regulator is of the opinion that the main purpose or one of the main purposes of the act or failure was— |
| (i) | to prevent the recovery of the whole or any part of a debt which was, or might become, due from the employer in relation to the scheme under section 75 of the Pensions Act 1995 (c.26) (deficiencies in the scheme assets), or |
| (ii) | otherwise than in good faith, to prevent such a debt becoming due or to reduce the amount of such a debt which was or would otherwise become due, and |
| (b) | it is an act which occurred, or a failure to act which first occurred, on or after 11th June 2003. |
(5) For the purposes of subsection (3)—
| (a) | the parties to an act or a deliberate failure include those persons who knowingly assist in the act or failure, and |
| (b) | "the relevant period" means the period which— |
| (i) | begins with the time when the act falling within subsection (4) occurs or the failure to act falling within that subsection first occurs, and |
| (ii) | ends with the issuing of the contribution notice. |
(6) The Regulator, when deciding for the purposes of subsection (3)(c) whether it is reasonable to impose liability on a particular person to pay the sum specified in the notice, must have regard to such matters as the Regulator considers relevant including, where relevant, the following matters—
| (a) | the degree of involvement of the person in the act or failure to act which falls within subsection (4), |
| (b) | the relationship which the person has or has had with the employer (including, where the employer is a company, whether the person has or has had control of the employer within the meaning of section 435(10) of the Insolvency Act 1986 (c.45)), |
| (c) | any connection or involvement which the person has or has had with the scheme, |
| (d) | if the act or failure to act was a notifiable event for the purposes of section 44 (duty to notify the Regulator of certain events), any failure by the person to comply with any obligation imposed on the person by subsection (1) of that section to give the Regulator notice of the event, |
| (e) | the financial circumstances of the person, and |
| (f) | such other matters as may be prescribed. |
(7) In subsection (6)(b) "company" has the meaning given by section 735(1) of the Companies Act 1985 (c.6).
(8) For the purposes of this section references to a debt due under section 75 of the Pensions Act 1995 (c.26) include a contingent debt under that section.
(9) Accordingly, in the case of such a contingent debt, the reference in subsection (4)(a)(ii) to preventing a debt becoming due is to be read as including a reference to preventing the occurrence of any of the events specified in section 75(4B)(a) or (b) of that Act upon which the debt is contingent.
(10) For the purposes of this section—
| (a) | section 249 of the Insolvency Act 1986 (c.45) (connected persons) applies as it applies for the purposes of any provision of the first Group of Parts of that Act, |
| (b) | section 435 of that Act (associated persons) applies as it applies for the purposes of that Act, and |
| (c) | section 74 of the Bankruptcy (Scotland) Act 1985 (c.66) (associated persons) applies as it applies for the purposes of that Act.'. |
The sum specified in a section [Contribution notices where avoidance of employer debt] contribution notice
Malcolm Wicks
NC40
To move the following Clause:—
'(1) The sum specified by the Regulator in a contribution notice under section [Contribution notices where avoidance of employer debt] may be either the whole or a specified part of the shortfall sum in relation to the scheme.
(2) Subject to subsection (3), the shortfall sum in relation to a scheme is—
| (a) | in a case where, at the relevant time, a debt was due from the employer to the trustees or managers of the scheme under section 75 of the Pensions Act 1995 (c.26) ("the 1995 Act") (deficiencies in the scheme assets), the amount which the Regulator estimates to be the amount of that debt at that time, and |
| (b) | in a case where, at the relevant time, no such debt was due, the amount which the Regulator estimates to be the amount of the debt under section 75 of the 1995 Act which would become due if— |
| (i) | subsection (2) of that section applied, and |
| (ii) | the time designated by the trustees or managers of the scheme for the purposes of that subsection were the relevant time. |
(3) Where the Regulator is satisfied that the act or failure to act falling within section [Contribution notices where avoidance of employer debt](4) resulted—
| (a) | in a case falling within paragraph (a) of subsection (2), in the amount of the debt which became due under section 75 of the 1995 Act being less than it would otherwise have been, or |
| (b) | in a case falling within paragraph (b) of subsection (2), in the amount of any such debt calculated for the purposes of that paragraph being less than it would otherwise have been, |
the Regulator may increase the amounts calculated under subsection (2)(a) or (b) by such amount as the Regulator considers appropriate.
(4) For the purposes of this section "the relevant time" means—
| (a) | in the case of an act falling within subsection (4) of section [Contribution notices where avoidance of employer debt], the time of the act, or |
| (b) | in the case of a failure to act falling within that subsection— |
| (i) | the time when the failure occurred, or |
| (ii) | where the failure continued for a period of time, the time which the Regulator determines and which falls within that period. |
(5) For the purposes of this section—
| (a) | references to a debt due under section 75 of the 1995 Act include a contingent debt under that section, and |
| (b) | references to the amount of such a debt include the amount of such a contingent debt.'. |
Content and effect of a section [Contribution notices where avoidance of employer debt] contribution notice
Malcolm Wicks
NC41
To move the following Clause:—
'(1) This section applies where a contribution notice is issued to a person under section [Contribution notices where avoidance of employer debt].
(2) The contribution notice must—
| (a) | contain a statement of the matters which it is asserted constitute the act or failure to act which falls within subsection (4) of section [Contribution notices where avoidance of employer debt], |
| (b) | specify the sum which the person is stated to be under a liability to pay, and |
| (c) | identify any other persons to whom contribution notices have been or are issued as a result of the act or failure to act in question and the sums specified in each of those notices. |
(3) Where the contribution notice states that the person is under a liability to pay the sum specified in the notice to the trustees or managers of the scheme, the sum is to be treated as a debt due from the person to the trustees or managers of the scheme.
(4) In such a case, the Regulator may, on behalf of the trustees or managers of the scheme, exercise such powers as the trustees or managers have to recover the debt.
(5) But during any assessment period (within the meaning of section 104) in relation to the scheme, the rights and powers of the trustees or managers of the scheme in relation to any debt due to them by virtue of a contribution notice are exercisable by the Board of the Pension Protection Fund to the exclusion of the trustees or managers and the Regulator.
(6) Where, by virtue of subsection (5), any amount is paid to the Board in respect of a debt due by virtue of a contribution notice, the Board must pay the amount to the trustees or managers of the scheme.
(7) Where the contribution notice states that the person is under a liability to pay the sum specified in the notice to the Board, the sum is to be treated as a debt due from the person to the Board.
(8) Where the contribution notice so specifies, the person to whom the notice is issued ("P") is to be treated as jointly and severally liable for the debt with any persons specified in the notice who are persons to whom corresponding contribution notices are issued.
(9) For the purposes of subsection (8), a corresponding contribution notice is a notice which—
| (a) | is issued as a result of the same act or failure to act falling within subsection (4) of section [Contribution notices where avoidance of employer debt] as the act or failure as a result of which P's contribution notice is issued, |
| (b) | specifies the same sum as is specified in P's contribution notice, and |
| (c) | specifies that the person to whom the contribution notice is issued is jointly and severally liable with P for that sum. |
(10) A debt due by virtue of a contribution notice is not to be taken into account for the purposes of section 75(2) and (4) of the Pensions Act 1995 (c.26) (deficiencies in the scheme assets) when ascertaining the amount or value of the assets or liabilities of a scheme.'.
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