Obtaining clearance from the Pensions Regulator
Produced in partnership with Vikki Massarano of ARC Pensions Law

The following Pensions practice note produced in partnership with Vikki Massarano of ARC Pensions Law provides comprehensive and up to date legal information covering:

  • Obtaining clearance from the Pensions Regulator
  • What is clearance?
  • When should a clearance application be made?
  • What are Type A events?
  • Employer-related Type A events
  • Scheme-related Type A events
  • Mitigating a Type A event
  • Who should make the application?
  • Trustee position
  • Making an application for clearance
  • More...

Obtaining clearance from the Pensions Regulator

FORTHCOMING DEVELOPMENT: An increase in clearance applications is expected following the coming into force of changes to the moral hazard regime made by the Pension Schemes Act 2021. Helpfully, TPR intends to review its clearance guidance to clarify its expectations as to what employers and trustees should do.

THIS PRACTICE NOTE APPLIES ONLY TO DEFINED BENEFIT (DB) OCCUPATIONAL PENSION SCHEMES

What is clearance?

The Pensions Act 2004 (PeA 2004) empowered the Pensions Regulator with a raft of powers. The most innovative and significant new powers were the moral hazard provisions in PeA 2004, ss 38–54. The moral hazard powers enable the Pensions Regulator to overlook corporate structures and apportion pension funding liability on third parties that are connected to, or associated with, a scheme's sponsoring employer by issuing, among other things, a contribution notice or a financial support direction.

Clearance is a statement of assurance from the Pensions Regulator confirming that it will not at a later date make the applicants (listed in the clearance application) provide financial support to an underfunded defined benefit occupational pension scheme by issuing a contribution notice or a financial support direction.

The clearance statement binds the Pensions Regulator in respect of the information in the application unless there is a material departure from the facts set out in the application.

A contribution notice

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