The Pensions Regulator makes no "Bonas" about issuing a contribution notice...
9 July 2010
The Pensions Regulator has issued its first contribution notice using its “moral hazard” powers introduced by the Pensions Act 2004. On 29 June, it published its determination to issue a £5million contribution notice in relation to the Bonas Group Pension Scheme. The use of a “prepack insolvency” of Bonas by the parent company (a Belgium-based company) to avoid pension liability and its failure to engage openly with the pension trustees or the Regulator were cited as the basis for the determination. Other significant points of note from the determination are that it is the first attempt by the Regulator to impose anti-avoidance penalties on an EU company and the Regulator’s view on what it considered to be a clear conflict of interest displayed by the parent company in controlling the decision making process for both the employer and the scheme. This is an interesting development and is another sign (the Sea Containers case being the first and the financial support direction issued by the Regulator this week against companies in the Nortel group) of the Regulator adopting a sterner approach to actions that result in pension scheme liabilities being avoided. It is understood the parent company is appealing the determination.
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Mairi Black (0141 228 8000)
The information contained in this article is given for general information only, reflects the current law on the date of this article, and does not constitute legal advice on any specific matter