The Pensions Regulator and its power to issue a contribution notice and financial support direction
Produced in partnership with Raquel Agnello QC of Erskine Chambers and Tom Robinson of Wilberforce Chambers
The Pensions Regulator and its power to issue a contribution notice and financial support direction

The following Restructuring & Insolvency guidance note Produced in partnership with Raquel Agnello QC of Erskine Chambers and Tom Robinson of Wilberforce Chambers provides comprehensive and up to date legal information covering:

  • The Pensions Regulator and its power to issue a contribution notice and financial support direction
  • The Pensions Regulator and the Pension Protection Fund
  • Contribution notices
  • Guidance on the application of the tests
  • Financial support direction
  • The ‘relevant time’
  • Reasonableness
  • Appeals
  • Employer
  • Financial support
  • more

The Pensions Regulator (the Regulator) is a non-departmental government body created by the Pensions Act 2004 (PeA 2004).

The power of the Regulator to issue contribution notices and financial support directions is located in the PeA 2004 ss 38-50.

These provisions are commonly referred to as the 'moral hazard' powers of the Regulator although this name is not found anywhere in the PA 2004. They are intended to address the risk of ‘moral hazard’ caused by the existence of the Pension Protect Fund (PPF), namely the risk that corporate groups would structure their affairs in a way that increased the risks to their pension schemes, safe in the knowledge that the PPF would have to step in if insolvency of the employer company occurred.

The two main moral hazard powers, and the only ones used to date, are the power to issue a contribution notice (CN) and the power to issue a financial support direction (FSD).

A CN requires the person to whom it is issued to make a contribution in a specified sum of money to a defined benefit occupational pension scheme. A CN may be issued to a person where tests specified in PeA 2004, s 38 are met.

A financial support direction (FSD) requires the person to whom it is issued to secure that financial support is put in place for a defined