This Practice Note examines the issues that can arise when the sponsoring employer(s) of a pension scheme is the subject of a ‘pre-packaged administration’ (also known as a pre-pack administration or simply a ‘pre-pack’). Pre-packs are sales of the insolvent company’s business and/or assets that are negotiated and agreed in advance of a company entering administration. The sale completes immediately following the administrator’s appointment or shortly thereafter. What is an administration? An administration is an insolvency process designed to encourage, if possible, the rescue of financially distressed companies (or at least their businesses) and to avoid the necessity of liquidation if at all possible. Originally introduced in 1986, administrators (a type of insolvency practitioner) have powers to oversee administrations. The scope of administration was widened in 2003 to further promote the ‘rescue culture’. Changes included the introduction of an automatic moratorium preventing the enforcement of security and certain other action by creditors without the administrator’s consent or leave of the court. From a pensions perspective, an important point to note is that the appointment

This Practice Note looks at the pension issues which arise on transactions (including share sales) to which the City Code on Takeovers and Mergers (the Takeover Code) applies. For pensions issues more generally applicable to share sales, see Pension issues in share sales—an introduction. The Takeover Code The Takeover Code is the common name for the City Code on Takeovers and Mergers. It is published by the Panel on Takeovers and Mergers (the Panel), the independent supervisory body for corporate transactions under Part 28 of the Companies Act 2006. Purpose of the Takeover Code The Takeover Code provides an orderly framework within which takeovers are to be conducted. Its main purpose is to ensure that the shareholders of the target company are treated fairly and equally and have the opportunity to decide on the merits of a takeover offer. The Takeover Code consists of principles and Rules and stresses the importance of complying with their spirit rather than their literal meaning. When does the Takeover Code apply? In broad terms, the Takeover

Automatic enrolment Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2017 Section 13 of the Pensions Act 2008 (PenA 2008), provides that an individual’s qualifying earnings are those of more than the amount specified in subsection (1)(a) of that section, and not more than the amount specified in subsection (1)(b) of that section. The automatic enrolment and re-enrolment earnings trigger is the earnings level at which employers must automatically enrol eligible jobholders into a qualifying workplace pension scheme. The automatic enrolment qualifying earnings band is, in relation to money purchase schemes, the band of earnings on which employers and workers must pay a minimum level of contributions. Each tax year, the Secretary of State has to review the following: • the automatic enrolment earnings trigger • the automatic re-enrolment earnings trigger • the qualifying earnings band Where the Secretary of State considers that any of the amounts should be changed, they must be revised by statutory instrument. Provisions are made under PenA 2008, ss 14, 15A, to among

Pensions analysis: In Reed v Revenue and Customs Commissioners, the First-tier Tribunal upheld an unauthorised payments charge arising from a pension liberation arrangement involving a QROPS, finding that a payment routed through a connected company was treated as made from pension scheme funds. However, it held that HMRC could not use the statutory review process to introduce a separate unauthorised payments surcharge that had not been objectively included in the original discovery assessment. The decision underlines both the breadth of the Finance Act 2004 (FA 2004) unauthorised payment regime, including for offshore QROPS, and the limits of HMRC’s review powers. Practitioners should scrutinise assessments carefully to ensure that each asserted liability is clearly identified from the outset. Produced in partnership with James Quarmby of Stephenson Harwood LLP.

Over time, the pensions industry has seen a shift from ‘pension liberation’ (defined below) to investment scams and fraud where savers are encouraged to transfer their pension pot into inappropriate or exotic investments that are highly unlikely to deliver the promised returns and may be subject to high costs and fees (see Definition of ‘pension scam’ below). This Practice Note looks at the legal considerations that arise in the context of pension liberation and other pension scams, including enforcement issues arising and the actions taken by the Pensions Regulator, the Pensions Ombudsman, HMRC and the Insolvency Service to combat pension liberation and pension scams. This Practice Note also provides practical pointers for trustees and other pension providers—see: Practical guidance for trustees/providers, below. With pension scams constantly evolving, pension liberation has become less common over time. Other forms of pension scams may involve persuading members to transfer their pension savings into occupational pension schemes so as to invest them in unusual/high-risk investments such as overseas property, renewable energy bonds, forestry,

In LPA Umbrella Trust, Re, Pensions Regulator v A Admin Ltd, the High Court held that schemes created by five trusts had constituted a misuse or misappropriation of the assets of an occupational or personal pension scheme, as beneficial interests of the members were void for uncertainty and the general prohibition of s 91(1) of the Pensions Act 1995 had been limited by s 91(5).

ARCHIVED: This archived Practice Note provides background reading on schemes or cases where pension liberation was suspected and where action was taken by the Pensions Regulator between 2011 and 2018. For information on what pension liberation may look like and the legal considerations relating to pension liberation, see Practice Notes: Pension liberation—an introduction and Pension liberation and pension scams—legal considerations. Pension liberation has existed as an issue for many years but has become more prevalent since 2011. Since that time a number of trustee appointments have been made by the Pensions Regulator, and there have also been several reported decisions of the High Court and the Regulator's Determinations Panel relating to those appointments and/or action taken directly by the Regulator against those operating suspected liberation schemes. Schemes or cases where pension liberation was suspected and where action was taken by the Pensions Regulator (or the trustee appointed by it) up to 2018 include: • Ark Schemes (May 2011) • Hollywell Enterprises Pension Scheme (October 2011)

This Practice Note provides an introduction to pension liberation, what it is, why it happens, its structures and characteristics, and considerations for the various parties involved. For further information on the legal considerations that arise in the context of pension liberation, see Practice Note: Pension liberation and pension scams—legal considerations. For further information on schemes where pension liberation was suspected and where action was taken by the Pensions Regulator up to 2018, see Practice Note: Pension liberation—actions taken by the Pensions Regulator until 2018 [Archived]. For further information on complaints that have been determined by the Pensions Ombudsman in relation to transfers of pension funds connected to pension liberation or pension scams up to 2018, see Practice Note: Pension liberation—key Pensions Ombudsman decisions up to 2018 [Archived]. The rise of pension liberation At its most basic, a pension is an arrangement by which an individual, or an employer, pays moneys into a fund that is invested and which aims to provide the individual with an income on retirement.

ARCHIVED: This archived Practice Note looks at some of the key complaints that have been determined by the Pensions Ombudsman up to 2018 in relation to transfers of pension funds connected to pension liberation or pension scams. It is not maintained and is for background purposes only. For information on the different forms of pension liberation and the legal considerations relating to pension liberation, see Practice Notes: Pension liberation—an introduction and Pension liberation and pension scams—legal considerations. A number of complaints have been determined by the Pensions ombudsman in relation to transfers of pension funds connected to pension liberation or pension scams. These can be seen as dividing broadly into three categories: • those where a requested transfer has been refused by the relevant trustee/provider, and the complaining member seeks an order requiring the transfer • those where a requested transfer proceeded, and the complaining member asserts that they have lost all or part of their pension funds as a result of the relevant trustee/provider

Law360: The number of defined benefit pension (DB) schemes in the UK has decreased by 2% since 2022, according to a report published on 20 February 2024 by The Pensions Regulator (TPR) that shows that funding levels for retirement savings plans are continuing to improve.

Pensions analysis: The Pensions Ombudsman has rejected a complaint about the payment of a statutory pension. Martin Scott of gunnercooke LLP looks at the decision.

Pensions analysis: The Pensions Ombudsman has rejected a complaint about a return of pension paid by mistake. Martin Scott of gunnercooke LLP looks at the decision