Contribution notices (CNs)
Contribution notices (CNs)

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Contribution notices (CNs)
  • The Pensions Regulator's moral hazard powers
  • What is a contribution notice?
  • Maximum liability under a contribution notice
  • In respect of which schemes can a contribution notice be issued?
  • Who can be issued with a contribution notice?
  • Meaning of 'person'
  • Meaning of 'employer'
  • Meaning of 'relevant period'
  • In what circumstances can the Pensions Regulator issue a contribution notice?
  • More...


The Pensions Regulator's moral hazard powers

The Pensions Act 2004 (PeA 2004) empowered the then newly-formed Pensions Regulator with a raft of powers. The most innovative and significant new powers were the moral hazard provisions in sections 38–54 of the PeA 2004. The moral hazard powers (also known as anti-avoidance powers) enable the Pensions Regulator to counter attempts designed to avoid responsibility for pension funding obligations and, ultimately, to reduce the exposure of the Pension Protection Fund (PPF). In certain circumstances, the Pensions Regulator can even look behind corporate structures to apportion pension liabilities to third parties that are connected to, or associated with, a scheme's sponsoring employer.

The Pensions Regulator's moral hazard powers may take the form of:

  1. a contribution notice, which requires a specific sum to be paid into a pension scheme

  2. a financial support direction, which requires financial support to be arranged to assist the funding of a scheme, or

  3. a restoration order, which restores the scheme to the position it was in before a certain transaction occurred

For further information on financial support directions and restoration orders, see Practice Notes: Financial support directions (FSDs) and Restoration orders.

As with financial support directions and restoration orders, the power to issue a contribution notice is a 'reserved regulatory function' of the Pensions Regulator. This means it

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