Restoration orders
Restoration orders

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

  • Restoration orders
  • The Pensions Regulator's moral hazard powers
  • In respect of which schemes can a restoration order be issued?
  • What is a restoration order?
  • What types of transactions are relevant?
  • Transactions at an undervalue
  • Relevant event in relation to an employer
  • What types of actions can be required under a restoration order?
  • Non-compliance with a restoration order
  • For further information, see:


The Pensions Regulator's moral hazard powers

The Pensions Act 2004 (PeA 2004) empowered the then newly-formed Pensions Regulator (the Regulator) with a raft of powers. The most innovative and significant new powers were the moral hazard provisions in ss 38–56 of the PeA 2004. The moral hazard powers enable the 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 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 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—see below

For more information on contribution notices and financial support directions, see Practice Notes: Contribution notices and Financial support directions.

As with contribution notices and financial support directions, the power to issue a restoration order is a 'reserved regulatory function' of the Pensions Regulator. This means it can only be exercised by the Determinations Panel of the Pensions Regulator. For more information on the Determinations Panel, see

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