The Pensions Regulator issues its first contribution notice making a parent company responsible for a pension scheme's underfunding
30 June 2010
30 June 2010 – A determination notice to issue a contribution notice of £5 million, in relation to the Bonas Group Pension Scheme, was published yesterday by the Pensions Regulator (TPR). This is the first time that TPR has issued a contribution notice.
Since April 2005, TPR has had the ability to issue a contribution notice. Under a contribution notice, a person can be made personally liable for pension scheme's underfunding if they have been a party to an act/omission designed to avoid a pension scheme's liabilities. In the five years since being established TPR has not issued a contribution notice, although there have been reportedly occasions on which it has threatened to do so.
In this case, TPR issued the contribution notice because it found that the parent company of the Bonas textile machinery business had retained that business while avoiding the attaching pension liability by placing the sponsor into a pre-pack insolvency. In addition, it had failed to negotiate with TPR and the scheme trustees.
Martin Scott, Pension partner at Mayer Brown said: "The imposition of a contribution notice has been five years in the waiting and comes as a warning to employers not to ignore pension trustees or TPR when contemplating any corporate restructuring. Employers sometimes take a calculated risk by not engaging with the trustees and TPR. In this case it seems that gamble has not paid off."
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