The Pensions (Northern Ireland) Order 2005

Contribution notices where avoidance of employer debt N.I.

Contribution notices where avoidance of employer debt N.I.

F1 34 .—(1) This Article applies in relation to an occupational pension scheme other than—

(a) a money purchase scheme, or

(b) a prescribed scheme or a scheme of a prescribed description.

(2) The Regulator may issue a notice to a person stating that the person is under a liability to pay the sum specified in the notice (a “contribution notice”)—

(a) to the trustees or managers of the scheme, or

(b) where the Board has assumed responsibility for the scheme in accordance with Chapter 3 of Part III (pension protection), to the Board.

(3) The Regulator may issue a contribution notice to a person only if—

(a) the Regulator is of the opinion that the person was a party to an act or a deliberate failure to act which falls within paragraph (5),

(b) the person was at any time in the relevant period—

(i) the employer in relation to the scheme, or

(ii) a person connected with, or an associate of, the employer,

(c) the Regulator is of the opinion that the person, in being a party to the act or failure, was not acting in accordance with his functions as an insolvency practitioner in relation to another person, and

[F2 (d) the Regulator is of the opinion that it is reasonable to impose liability on the person to pay the sum specified in the notice, having regard to—

(i) the extent to which, in all the circumstances of the case, it was reasonable for the person to act, or fail to act, in the way that the person did, and

(ii) such other matters as the Regulator considers relevant, including (where relevant) the matters falling within paragraph (7).]

(4) But the Regulator may not issue a contribution notice, in such circumstances as may be prescribed, to a person of a prescribed description.

(5) An act or a failure to act falls within this paragraph if—

(a) the Regulator is of the opinion that [F3 the material detriment test[F4 , the employer insolvency test or the employer resources test] is met in relation to the act or failure (see [F5 Articles 34A, 34C and 34E)] or that] the main purpose or one of the main purposes of the act or failure was—

(i) to prevent the recovery of the whole or any part of a debt which was, or might become, due from the employer in relation to the scheme under Article 75 of the 1995 Order (deficiencies in the scheme assets), or

(ii) F6 . . . to prevent such a debt becoming due, to compromise or otherwise settle such a debt, or to reduce the amount of such a debt which would otherwise become due,

(b) it is an act which occurred or a failure to act which first occurred—

(i) on or after 27th April 2004, and

(ii) before any assumption of responsibility for the scheme by the Board in accordance with Chapter 3 of Part III, and

(c) it is either—

(i) an act which occurred during the period of six years ending with the [F7 giving of a warning notice in respect of] the contribution notice in question, or

(ii) a failure which first occurred during, or continued for the whole or part of, that period.

(6) For the purposes of paragraph (3)—

(a) the parties to an act or a deliberate failure include those persons who knowingly assist in the act or failure, and

(b) “the relevant period” means the period which—

(i) begins with the time when the act falling within paragraph (5) occurs or the failure to act falling within that paragraph first occurs, and

(ii) ends with the [F8 giving of a warning notice in respect of] the contribution notice in question.

(7) [F9 The matters within this paragraph are—]

(a) the degree of involvement of the person in the act or failure to act which falls within paragraph (5),

(b) the relationship which the person has or has had with the employer (including, where the employer is a company within the meaning of paragraph (11) of Article 4 of the Insolvency Order, whether the person has or has had control of the employer within the meaning of paragraph (10) of that Article),

(c) any connection or involvement which the person has or has had with the scheme,

(d) if the act or failure to act was a notifiable event for the purposes of Article 64 (duty to notify the Regulator of certain events), any failure by the person to comply with any obligation imposed on the person by paragraph (1) of that Article to give the Regulator notice of the event,

(e) all the purposes of the act or failure to act (including whether a purpose of the act or failure was to prevent or limit loss of employment),

[F10 (ea) the value of any benefits which directly or indirectly the person receives, or is entitled to receive, from the employer or under the scheme;

(eb) the likelihood of relevant creditors being paid and the extent to which they are likely to be paid;]

[F11 (ec) the effect of the act or failure to act on the value of the assets or liabilities of the scheme or any relevant transferee scheme,]

(f) the financial circumstances of the person, and

(g) such other matters as may be prescribed.

[F12 (7A)  In paragraph (7)(eb) “ relevant creditors ” means—

(a) creditors of the employer, and

(b) creditors of any other person who has incurred a liability or other obligation (including one that is contingent or otherwise might fall due) to make a payment, or transfer an asset, to the scheme.]

[F13 (7B) In paragraph (7)(ec) “relevant transferee scheme” and the reference to the assets or liabilities of any relevant transferee scheme have the same meaning as in Article 34A.]

(8) For the purposes of this Article references to a debt due under Article 75 of the 1995 Order include a contingent debt under that Article.

(9) Accordingly, in the case of such a contingent debt, the reference in paragraph (5)(a)(ii) to preventing a debt becoming due is to be read as including a reference to preventing the occurrence of any of the events specified in Article 75(4C)(a) or (b) of that Order upon which the debt is contingent.

(10) For the purposes of this Article—

(a) Article 7 of the Insolvency Order (connected persons) applies as it applies for the purposes of any provision of Parts II to VII of that Order, and

(b) Article 4 of that Order (associated persons) applies as it applies for the purposes of that Order.

(11) For the purposes of this Article “insolvency practitioner”, in relation to a person, means—

(a) a person acting as an insolvency practitioner, in relation to that person, in accordance with Article 3 of the Insolvency Order, or

(b) an insolvency practitioner within the meaning of Article 105(9)(b) (persons of a prescribed description).

[F14 (12) Paragraph (13) applies if the Regulator is of the opinion that—

(a) a person was a party to a series of acts or failures to act,

(b) each of the acts or failures in the series falls within paragraph (5)(b) and (c), and

(c) the material detriment test[F15 , the employer insolvency test or the employer resources test] is met in relation to the series, or the main purpose or one of the main purposes of the series was as mentioned in paragraph (5)(a)(i) or (ii).

(13) The series of acts or failures to act is to be regarded as an act or failure to act falling within paragraph (5) (and, accordingly, the reference in paragraph (6)(b)(i) to the act or failure to act falling with paragraph (5) is to the first of the acts or failures to act in the series).]

[F16 (14)  In this Article “ a warning notice ” means a notice given as mentioned in Article 91(2)(a). ]

F1 mod. by SR 2005/378

F2 Art. 34(3)(d) substituted (15.12.2008) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 118(1)(2)(h)(3)(a)(iii)(vi)(b), Sch. 8 para. 7(2) (with Sch. 8 para. 15(1))

F3 Words in art. 34(5)(a) inserted (15.12.2008 for certain purposes, otherwise 29.6.2009) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 118(1)(2)(h)(3)(a)(ii)(vi)(b), Sch. 8 para. 2(1) (with Sch. 8 para. 15(1)); S.R. 2009/249, art. 2(a)(b)(ii)

F4 Words in art. 34(5)(a) inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 2(1)(a)(i); S.R. 2021/271, art. 2(5)(a) (with art. 3(1)(2))

F5 Words in art. 34(5)(a) substituted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 2(1)(a)(ii); S.R. 2021/271, art. 2(5)(a) (with art. 3(1)(2))

F6 Words in art. 34(5)(a)(ii) repealed (15.12.2008) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 116, 118(1)(2)(h)(3)(a)(iii)(vi)(b)(c), Sch. 8 para. 6, Sch. 10 Pt. 5 (with Sch. 8 para. 15(1))

F7 Words in art. 34(5)(c)(i) substituted (7.6.2012) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 24(2), 34(3); S.R. 2012/233, art. 2(2)(g)

F8 Words in art. 34(6)(b)(ii) substituted (7.6.2012) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 24(2), 34(3); S.R. 2012/233, art. 2(2)(g)

F9 Words in art. 34(7) substituted (15.12.2008) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 118(1)(2)(h)(3)(a)(iii)(vi)(b), Sch. 8 para. 7(3)(a) (with Sch. 8 para. 15(1))

F10 Art. 34(7)(ea)(eb) inserted (15.12.2008) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 118(1)(2)(h)(3)(a)(iii)(vi)(b), Sch. 8 para. 7(3)(b) (with Sch. 8 para. 15(1))

F11 Art. 34(7)(ec) inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 3(3); S.R. 2021/271, art. 2(3)(a) (with art. 3(1)(2))

F12 Art. 34(7A) inserted (15.12.2008) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 118(1)(2)(h)(3)(a)(iii)(vi)(b), Sch. 8 para. 7(4) (with Sch. 8 para. 15(1))

F13 Art. 34(7B) inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 3(4); S.R. 2021/271, art. 2(3)(a) (with art. 3(1)(2))

F14 Art. 34(12)(13) added (15.12.2008 for certain purposes, otherwise 29.6.2009) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 118(1)(2)(h)(3)(a)(iv)(vi)(b), Sch. 8 para. 8(1) (with Sch. 8 para. 15(2)); S.R. 2009/249, art. 2(a)(b)(ii)

F15 Words in art. 34(12)(c) inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 2(1)(b); S.R. 2021/271, art. 2(5)(a) (with art. 3(1)(2))

F16 Art. 34(14) added (7.6.2012) by Pensions Act (Northern Ireland) 2012 (c. 3), ss. 24(3), 34(3); S.R. 2012/233, art. 2(2)(g)

Modifications etc. (not altering text)

C1 Art. 34 modified (1.8.2022) by The Occupational Pension Schemes (Collective Money Purchase Schemes) (Modifications and Consequential and Miscellaneous Amendments) Regulations (Northern Ireland) 2022 (S.R. 2022/192), regs. 1(1), 14(2)

[F17 Article 34 contribution notice: meaning of “material detriment test” N.I.

34A— (1) For the purposes of Article 34 the material detriment test is met in relation to an act or failure if the Regulator is of the opinion that the act or failure has detrimentally affected in a material way the likelihood of accrued scheme benefits being received (whether the benefits are to be received as benefits under the scheme or otherwise).

(2) In this Article any reference to accrued scheme benefits being received is a reference to benefits the rights to which have accrued by the relevant time being received by, or in respect of, the persons who were members of the scheme before that time.

(3)  In this Article “ the relevant time ” means—

(a) in the case of an act, the time of the act, or

(b) in the case of a failure—

(i) the time when the failure occurred, or

(ii) where the failure continued for a period of time, the time which the Regulator determines and which falls within that period;

and, in the case of acts or failures to act forming part of a series, any reference in this paragraph to an act or failure is a reference to the last of the acts or failures in that series.

(4) In deciding for the purposes of Article 34 whether the material detriment test is met in relation to an act or failure, the Regulator must have regard to such matters as it considers relevant, including (where relevant)—

(a) the value of the assets or liabilities of the scheme or of any relevant transferee scheme,

(b) the effect of the act or failure on the value of those assets or liabilities,

(c) the scheme obligations of any person,

(d) the effect of the act or failure on any of those obligations (including whether the act or failure causes the country or territory in which any of those obligations would fall to be enforced to be different),

(e) the extent to which any person is likely to be able to discharge any scheme obligation in any circumstances (including in the event of insolvency or bankruptcy),

(f) the extent to which the act or failure has affected, or might affect, the extent to which any person is likely to be able to do as mentioned in sub-paragraph (e), and

(g) such other matters as may be prescribed.

(5)  In paragraph (4) “ scheme obligation ” means a liability or other obligation (including one that is contingent or otherwise might fall due) to make a payment, or transfer an asset, to—

(a) the scheme, or

(b) any relevant transferee scheme in respect of any persons who were members of the scheme before the relevant time.

(6) In this Article—

(a) “ relevant transferee scheme ” means any work-based pension scheme to which any accrued rights to benefits under the scheme are transferred;

(b) any reference to the assets or liabilities of any relevant transferee scheme is a reference to those assets or liabilities so far as relating to persons who were members of the scheme before the relevant time.

(7) For the purposes of paragraph (6)(a) the reference to the transfer of accrued rights of members of a pension scheme to another pension scheme includes a reference to the extinguishing of those accrued rights in consequence of the obligation to make a payment, or transfer an asset, to that other scheme.

(8) In this Article—

(a) “ work-based pension scheme ” has the meaning given by Article 4(3);

(b) any reference to rights which have accrued is to be read in accordance with Article 67A(6) and (7) of the 1995 Order (reading any reference in those paragraphs to a subsisting right as a reference to a right which has accrued).

(9) In deciding for the purposes of this Article whether an act or failure has detrimentally affected in a material way the likelihood of accrued scheme benefits being received, the following statutory provisions are to be disregarded—

(a) Chapter 3 of Part 3 (the Board of the Pension Protection Fund: pension protection), and

(b) section 286 of the Pensions Act 2004 (the financial assistance scheme for members of certain pension schemes).

(10) Regulations may amend any provision of paragraphs (4) to (8).

F17 Arts. 34A, 34B inserted (15.12.2008 for certain purposes, otherwise 29.6.2009) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 118(1)(2)(h)(3)(a)(ii)(vi)(b), Sch. 8 para. 2(2) (with Sch. 8 para. 15(1)); S.R. 2009/249, art. 2(a)(b)(ii)

Article 34 contribution notice issued by reference to material detriment test: defence N.I.

34B— (1) This Article applies where—

(a) a warning notice is given to any person (“P”) in respect of a contribution notice under Article 34, and

(b) the contribution notice under consideration would be issued wholly or partly by reference to the Regulator's opinion that the material detriment test is met in relation to an act or deliberate failure to act to which P was a party.

(2) If the Regulator is satisfied that P has shown that—

(a) conditions A and C are met, and

(b) where applicable, condition B is met,

the Regulator must not issue the contribution notice by reference to its being of the opinion mentioned in paragraph (1)(b).

(3) Condition A is that, before becoming a party to the act or failure, P gave due consideration to the extent to which the act or failure might detrimentally affect in a material way the likelihood of accrued scheme benefits being received.

(4) Condition B is that, in any case where as a result of that consideration P considered that the act or failure might have such an effect, P took all reasonable steps to eliminate or minimise the potential detrimental effects that the act or failure might have on the likelihood of accrued scheme benefits being received.

(5) Condition C is that, having regard to all relevant circumstances prevailing at the relevant time, it was reasonable for P to conclude that the act or failure would not detrimentally affect in a material way the likelihood of accrued scheme benefits being received.

(6) P is to be regarded as giving the consideration mentioned in condition A only if P has made the enquiries, and done the other acts, that a reasonably diligent person would have made or done in the circumstances.

(7) For the purposes of condition C—

(a) “ the relevant time ” means the time at which the act occurred or the failure to act first occurred;

(b) the reference to the circumstances mentioned in that condition is a reference to those circumstances of which P was aware, or ought reasonably to have been aware, at that time (including acts or failures to act which have occurred before that time and P's expectation at that time of other acts or failures to act occurring).

(8) In the case of acts or failures to act forming part of a series, P is to be regarded as having shown the matters mentioned in paragraph (2) if P shows in the case of each of the acts or failures in the series that—

(a) conditions A and C are met, and (where applicable) condition B is met, in relation to the act or failure, or

(b) the act or failure was one of a number of acts or failures (a “group” of acts or failures) selected by P in relation to which the following matters are shown.

(9) The matters to be shown are that—

(a) before becoming a party to the first of the acts or failures in the group, condition A is met in relation to the effect of the acts or failures in the group taken together,

(b) condition B is (where applicable) met in relation to that effect, and

(c) condition C is then met in relation to each of the acts or failures in the group (determined at the time at which each act or failure concerned occurred or first occurred).

(10) If at any time P considers that condition C will not be met in relation to any particular act or failure in the group—

(a) the previous acts or failures in the group are to be regarded as a separate group for the purposes of paragraph (8), and

(b) P may then select another group consisting of the particular act or failure concerned, and any subsequent act or failure, in relation to which P shows the matters mentioned in paragraph (9).

Nothing in sub-paragraph (b) is to be read as preventing P from showing the matters mentioned in paragraph (8)(a).

(11) If—

(a) P is unable to show in the case of each of the acts or failures in the series that the matters set out in paragraph (8)(a) or (b) are met, but

(b) does show in the case of some of them that those matters are met,

the acts or failures within sub-paragraph (b) are not to count for the purposes of Article 34A as acts or failures to act in the series.

(12) In this Article—

(a) “ a warning notice ” means a notice given as mentioned in Article 91(2)(a);

[F18 (b) a reference to party to an act or failure to act includes a reference to a person who knowingly assists in the act or failure;]

(c) any reference to the accrued scheme benefits being received has the same meaning as in Article 34A;

and paragraph (9) of Article 34A applies for the purposes of conditions A to C as it applies for the purposes of that Article.

(13) Regulations may amend this Article.]

F17 Arts. 34A, 34B inserted (15.12.2008 for certain purposes, otherwise 29.6.2009) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 118(1)(2)(h)(3)(a)(ii)(vi)(b), Sch. 8 para. 2(2) (with Sch. 8 para. 15(1)); S.R. 2009/249, art. 2(a)(b)(ii)

F18 Art. 34B(12)(b) substituted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 17; S.R. 2021/271, art. 2(4)(c)

[F19 Article 34 contribution notice: meaning of “employer insolvency test” N.I.

34C— (1) For the purposes of Article 34 the employer insolvency test is met in relation to an act or failure to act if the Regulator is of the opinion that—

(a) immediately after the relevant time, the value of the assets of the scheme was less than the amount of the liabilities of the scheme, and

(b) if a debt under Article 75(4) of the 1995 Order (deficiencies in scheme assets: employer insolvency etc) had fallen due from the employer to the scheme immediately after the relevant time, the act or failure would have materially reduced the amount of the debt likely to be recovered by the scheme.

(2) For the purposes of paragraph (1)—

(a) the value of the assets of the scheme immediately after the relevant time is the value which the Regulator estimates to be their value,

(b) the amount of the liabilities of the scheme immediately after the relevant time is the amount which the Regulator estimates to be the amount of those liabilities, and

(c) the amount of the debt is the amount which the Regulator estimates to be the amount of the debt under Article 75(4) of the 1995 Order that would have fallen due immediately after the relevant time.

(3) When estimating the value and the amounts referred to in paragraph (2), the Regulator must take into account how assets and liabilities, and their value or amount, are determined and calculated for the purposes of Article 75(4) of the 1995 Order.

(4) When estimating—

(a) the value of the assets of the scheme immediately after the relevant time, and

(b) the amount of the debt under Article 75(4) of the 1995 Order falling due immediately after the relevant time,

the Regulator must disregard the amount of any debt due immediately after the relevant time from the employer under Article 75 of the 1995 Order.

(5) In this Article “the relevant time” means—

(a) in the case of an act, the time of the act, or

(b) in the case of a failure to act—

(i) the time when the failure occurred, or

(ii) where the failure continued for a period of time, the time which the Regulator determines and which falls within that period;

and, in the case of acts or failures to act forming part of a series, any reference in this paragraph to an act or failure to act is a reference to the last of the acts or failures in that series.

F19 Arts. 34C, 34D inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 2(2); S.R. 2021/271, art. 2(5)(a) (with art. 3(1)(2))

Article 34 contribution notice issued by reference to employer insolvency test: defence N.I.

34D— (1) This Article applies where—

(a) a warning notice is given to any person (“P”) in respect of a contribution notice under Article 34, and

(b) the contribution notice under consideration would be issued wholly or partly by reference to the Regulator's opinion that the employer insolvency test is met in relation to an act or deliberate failure to act to which P was a party.

(2) If the Regulator is satisfied that P has shown that—

(a) conditions A and C are met, and

(b) where applicable, condition B is met,

the Regulator must not issue the contribution notice by reference to its being of the opinion mentioned in paragraph (1)(b).

(3) If the Regulator is satisfied that P or another person has shown that condition D is met, the Regulator must not issue the contribution notice by reference to its being of the opinion mentioned in paragraph (1)(b).

(4) Condition A is that, before becoming a party to the act or failure, P gave due consideration to the extent to which, if a debt under Article 75(4) of the 1995 Order were to fall due from the employer to the scheme—

(a) immediately after the act or failure, or

(b) where the failure might continue for a period of time, at any time within that period,

the act or failure might materially reduce the amount of the debt likely to be recovered by the scheme.

(5) Condition B is that, in any case where as a result of that consideration P considered that the act or failure might have such an effect, P took all reasonable steps to eliminate or minimise the potential for the act or failure to have such an effect.

(6) Condition C is that, having regard to all relevant circumstances prevailing at the time of the act or at the time when the failure to act first occurred, it was reasonable for P to conclude that, if a debt under Article 75(4) of the 1995 Order were to fall due from the employer to the scheme—

(a) immediately after the act or failure, or

(b) where the failure might continue for a period of time, at any time within that period,

the act or failure would not materially reduce the amount of the debt likely to be recovered by the scheme.

(7) Condition D is that, immediately after the relevant time, the value of the assets of the scheme equalled or was more than the amount at that time of the liabilities of the scheme.

(8) P is to be regarded as giving the consideration mentioned in condition A only if P has made the enquiries, and done the other acts, that a reasonably diligent person would have made or done in the circumstances.

(9) For the purposes of condition C the reference to the circumstances mentioned in that condition is a reference to those circumstances of which P was aware, or ought reasonably to have been aware, at the time of the act or the time when the failure to act first occurred (including acts or failures to act which have occurred before that time and P's expectation at that time of other acts or failures to act occurring).

(10) For the purposes of conditions A, C and D the amount of any debt due at the time in question from the employer under Article 75 of the 1995 Order is to be disregarded.

(11) In the case of acts or failures to act forming part of a series, P is to be regarded as having shown the matters mentioned in paragraph (2) if P shows in the case of each of the acts or failures in the series that—

(a) conditions A and C are met, and (where applicable) condition B is met, in relation to the act or failure, or

(b) the act or failure was one of a number of acts or failures (a “group” of acts or failures) selected by P in relation to which the following matters are shown.

(12) The matters to be shown are that—

(a) before becoming a party to the first of the acts or failures in the group, condition A is met in relation to the effect of the acts or failures in the group taken together,

(b) condition B is (where applicable) met in relation to that effect, and

(c) condition C is then met in relation to each of the acts or failures in the group (determined at the time at which each act or failure concerned occurred or first occurred).

(13) If at any time P considers that condition C will not be met in relation to any particular act or failure in the group—

(a) the previous acts or failures in the group are to be regarded as a separate group for the purposes of paragraph (11), and

(b) P may then select another group consisting of the particular act or failure concerned, and any subsequent act or failure, in relation to which P shows the matters mentioned in paragraph (12).

Nothing in sub-paragraph (b) is to be read as preventing P from showing the matters mentioned in paragraph (11)(a).

(14) If—

(a) P is unable to show in the case of each of the acts or failures in the series that the matters set out in paragraph (11)(a) or (b) are met, but

(b) does show in the case of some of them that those matters are met,

the acts or failures within sub-paragraph (b) are not to count for the purposes of Article 34C as acts or failures to act in the series.

(15) In this Article—

(a) “the relevant time” has the meaning given by Article 34C;

(b) “a warning notice” means a notice given as mentioned in Article 91(2)(a);

(c) a reference to a party to an act or failure to act includes a reference to a person who knowingly assists in the act or failure.]

F19 Arts. 34C, 34D inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 2(2); S.R. 2021/271, art. 2(5)(a) (with art. 3(1)(2))

[F20 Article 34 contribution notice: meaning of “employer resources test” N.I.

34E— (1) For the purposes of Article 34 the employer resources test is met in relation to an act or failure to act if the Regulator is of the opinion that—

(a) the act or failure reduced the value of the resources of the employer, and

(b) that reduction was a material reduction relative to the estimated Article 75 debt in relation to the scheme.

(2) For the purposes of this Article—

(a) what constitutes the resources of the employer is to be determined in accordance with regulations;

(b) the value of the resources of the employer is to be determined, calculated and verified in a prescribed manner.

(3) In this Article the “estimated Article 75 debt” means the amount which the Regulator estimates to be the amount of the debt which would become due from the employer to the trustees or managers of the scheme under Article 75 of the 1995 Order (deficiencies in the scheme assets) if—

(a) Article 75(2) applied, and

(b) the time designated by the trustees or managers of the scheme for the purposes of Article 75(2) were the relevant time.

(4) When calculating the estimated Article 75 debt under paragraph (3), the amount of any debt due at the relevant time from the employer under Article 75 of the 1995 Order is to be disregarded.

(5) In this Article “the relevant time” means—

(a) in a case where the act or failure to act forms part of a series of acts or failures to act, the time immediately before the first of the acts occurred or the first of the failures to act first occurred;

(b) in any other case, the time immediately before the act occurred or the failure to act first occurred.

F20 Arts. 34E, 34F inserted (1.9.2021 for specified purposes, 1.10.2021 in so far as not already in operation) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 2(3); S.R. 2021/240, art. 2(1)(c); S.R. 2021/271, art. 2(5)(a) (with art. 3(1)(2))

Article 34 contribution notice issued by reference to employer resources test: defence N.I.

34F— (1) This Article applies where—

(a) a warning notice is given to any person (“P”) in respect of a contribution notice under Article 34, and

(b) the contribution notice under consideration would be issued wholly or partly by reference to the Regulator's opinion that the employer resources test is met in relation to an act or deliberate failure to act to which P was a party.

(2) If the Regulator is satisfied that P has shown that—

(a) conditions A and C are met, and

(b) where applicable, condition B is met,

the Regulator must not issue the contribution notice by reference to its being of the opinion mentioned in paragraph (1)(b).

(3) Condition A is that, before becoming a party to the act or failure, P gave due consideration to the extent to which the act or failure might reduce the value of the resources of the employer relative to the estimated Article 75 debt in relation to the scheme.

(4) Condition B is that, in any case where as a result of that consideration P considered that the act or failure might have such an effect, P took all reasonable steps to eliminate or minimise the potential for the act or failure to have such an effect.

(5) Condition C is that, having regard to all relevant circumstances prevailing at the time of the act or at the time when the failure to act first occurred, it was reasonable for P to conclude that the act or failure would not bring about a reduction in the value of the resources of the employer that would be a material reduction relative to the estimated Article 75 debt in relation to the scheme.

(6) P is to be regarded as giving the consideration mentioned in condition A only if P has made the enquiries, and done the other acts, that a reasonably diligent person would have made or done in the circumstances.

(7) For the purposes of condition C the reference to the circumstances mentioned in that condition is a reference to those circumstances of which P was aware, or ought reasonably to have been aware, at the time of the act or the time when the failure to act first occurred (including acts or failures to act which have occurred before that time and P's expectation at that time of other acts or failures to act occurring).

(8) For the purposes of conditions A and C—

(a) the “estimated Article 75 debt” means the amount which is a reasonable estimate of the amount of the debt which would become due from the employer to the trustees or managers of the scheme under Article 75 of the 1995 Order (deficiencies in the scheme assets) if—

(i) Article 75(2) applied, and

(ii) the time designated by the trustees or managers of the scheme for the purposes of Article 75(2) were the time immediately before the act occurred or the failure to act first occurred;

(b) the amount of any debt due at the time in question from the employer under Article 75 of the 1995 Order is to be disregarded.

(9) In the case of acts or failures to act forming part of a series, P is to be regarded as having shown the matters mentioned in paragraph (2) if P shows in the case of each of the acts or failures in the series that—

(a) conditions A and C are met, and (where applicable) condition B is met, in relation to the act or failure, or

(b) the act or failure was one of a number of acts or failures (a “group” of acts or failures) selected by P in relation to which the following matters are shown.

(10) The matters to be shown are that—

(a) before becoming a party to the first of the acts or failures in the group, condition A is met in relation to the effect of the acts or failures in the group taken together,

(b) condition B is (where applicable) met in relation to that effect, and

(c) condition C is then met in relation to each of the acts or failures in the group (determined at the time at which each act or failure concerned occurred or first occurred).

(11) If at any time P considers that condition C will not be met in relation to any particular act or failure in the group—

(a) the previous acts or failures in the group are to be regarded as a separate group for the purposes of paragraph (9), and

(b) P may then select another group consisting of the particular act or failure concerned, and any subsequent act or failure, in relation to which P shows the matters mentioned in paragraph (10).

Nothing in sub-paragraph (b) is to be read as preventing P from showing the matters mentioned in paragraph (9)(a).

(12) If—

(a) P is unable to show in the case of each of the acts or failures in the series that the matters set out in paragraph (9)(a) or (b) are met, but

(b) does show in the case of some of them that those matters are met,

the acts or failures within sub-paragraph (b) are not to count for the purposes of Article 34E as acts or failures to act in the series.

(13) In this Article—

(a) Article 34E(2) (the resources of the employer and their value) has effect for the purpose of this Article as it has effect for the purposes of Article 34E;

(b) “a warning notice” means a notice given as mentioned in Article 91(2)(a);

(c) a reference to a party to an act or failure to act includes a reference to a person who knowingly assists in the act or failure.]

F20 Arts. 34E, 34F inserted (1.9.2021 for specified purposes, 1.10.2021 in so far as not already in operation) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 2(3); S.R. 2021/240, art. 2(1)(c); S.R. 2021/271, art. 2(5)(a) (with art. 3(1)(2))

The sum specified in an Article 34 contribution notice N.I.

F21 35 .—(1) The sum specified by the Regulator in a contribution notice under Article 34 may be either the whole or a specified part of the shortfall sum in relation to the scheme.

(2) Subject to paragraph (3), the shortfall sum in relation to a scheme is—

(a) in a case where, at the relevant time, a debt was due from the employer to the trustees or managers of the scheme under Article 75 of the 1995 Order (deficiencies in the scheme assets), the amount which the Regulator estimates to be the amount of that debt at that time, and

(b) in a case where, at the relevant time, no such debt was due, the amount which the Regulator estimates to be the amount of the debt under Article 75 of the 1995 Order which would become due if—

(i) paragraph (2) of that Article applied, and

(ii) the time designated by the trustees or managers of the scheme for the purposes of that paragraph were the relevant time.

(3) Where the Regulator is satisfied that the act or failure to act falling within Article 34(5) resulted—

(a) in a case falling within sub-paragraph (a) of paragraph (2), in the amount of the debt which became due under Article 75 of the 1995 Order being less than it would otherwise have been, or

(b) in a case falling within sub-paragraph (b) of paragraph (2), in the amount of any such debt calculated for the purposes of that sub-paragraph being less than it would otherwise have been,

the Regulator may increase the amounts calculated under paragraph (2)(a) or (b) by such amount as the Regulator considers appropriate.

[F22 (4) For the purposes of this Article “the relevant time” means the end of the scheme year which ended most recently before the day on which the Regulator gives a determination notice under Article 91(2)(d) in respect of an intended contribution notice under Article 34.]

F23 (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) For the purposes of this Article—

(a) references to a debt due under Article 75 of the 1995 Order include a contingent debt under that Article, and

(b) references to the amount of such a debt include the amount of such a contingent debt.

F21 mod. by SR 2005/378

F22 Art. 35(4) substituted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 4(2); S.R. 2021/271, art. 2(3)(b) (with art. 3(1)(2))

F23 Art. 35(4A) omitted (1.10.2021) by virtue of Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 4(3); S.R. 2021/271, art. 2(3)(b) (with art. 3(1)(2))

[F24 Article 34 contribution notice: transfer of members of the scheme N.I.

35A— (1) This Article applies where—

(a) the Regulator is of the opinion that in relation to a scheme (“ the initial scheme ”) in relation to which Article 34 applies—

(i) an act or failure to act falling within paragraph (5) of that Article has occurred (or first occurred) at any time, and

(ii) the other conditions in that Article for issuing a contribution notice are met in relation to the initial scheme (or, but for any transfer falling within sub-paragraph (b), would be met), and

(b) the accrued rights of at least two persons who were members of the initial scheme are transferred at that or any subsequent time to one or more work-based pension schemes (whether by virtue of the act or otherwise).

(2) The Regulator may issue a contribution notice under Article 34 in relation to any transferee scheme (and, accordingly, any reference in Article 36 or 37 to the scheme is to the transferee scheme).

(3) In the case of any contribution notice issued by virtue of paragraph (2) to any transferee scheme which is not within paragraph (5)(a) or (b), Article 35 has effect as if any reference in that Article to the scheme were a reference to whichever of—

(a) the initial scheme, and

(b) the transferee scheme,

the Regulator determines to be more appropriate in the circumstances.

(4) In any case where Article 35 has effect in relation to the transferee scheme by virtue of paragraph (3), any reference in that Article to a debt under Article 75 of the 1995 Order is a reference to so much of that debt as, in the Regulator's opinion, is attributable to those members of the transferee scheme who were members of the initial scheme.

(5) In the case of any contribution notice issued by virtue of paragraph (2) to any transferee scheme which is—

(a) a scheme to which Article 75 of the 1995 Order does not apply, or

(b) a scheme to which that Article does apply in a case where the liabilities of the scheme that would be taken into account for the purposes of that Article do not relate to the members of the initial scheme,

the sum specified by the Regulator in the notice is determined in accordance with regulations (and not in accordance with Article 35).

(6) The Regulator may also issue a direction to the trustees or managers of any transferee scheme requiring them to take specified steps to secure that the sum payable under the notice is applied for the benefit of the members of the transferee scheme who were members of the initial scheme.

(7) If the trustees or managers fail to comply with a direction issued to them under paragraph (6), Article 10 of the 1995 Order (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.

F24 Arts. 35A, 35B inserted (15.12.2008) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 118(1)(2)(h)(3)(a)(v)(vi)(b), Sch. 8 para. 9 (with Sch. 8 para. 15(3) and transitional provision in Sch. 8 para. 16(1) for art. 35B(8)(10)(a))

Article 35A: supplemental N.I.

35B— (1)  In Article 35A a “ transferee scheme ”, in relation to any time, means any work-based pension scheme—

(a) to which the accrued rights of at least two persons who were members of the initial scheme have been transferred, and

(b) of which any of those persons are members at that time.

(2) For the purposes of Article 35A(1) and paragraph (1) it does not matter whether any rights are transferred to a work-based pension scheme directly from the initial scheme or following one or more other transfers to other work-based pension schemes.

(3) For the purposes of Article 35A and this Article references to the transfer of accrued rights of members of a pension scheme to another pension scheme include references to the extinguishing of those accrued rights in consequence of the obligation to make a payment, or transfer an asset, to that other scheme.

(4) In Article 35A and this Article—

(a) “ work-based pension scheme ” has the meaning given by Article 4(3);

(b) any reference to rights which have accrued is to be read in accordance with Article 67A(6) and (7) of the 1995 Order (reading any reference in those paragraphs to a subsisting right as a reference to a right which has accrued).

(5) Article 35A applies even if the initial scheme—

(a) is wound up as a result of any transfer falling within paragraph (1)(b) of that Article, or

(b) otherwise ceases to exist at the time of the transfer or at any subsequent time.

(6) Accordingly, in any such case, in paragraph (1) of that Article—

(a) the reference to a scheme to which Article 34 applies is a reference to a scheme which was such a scheme before the transfer;

(b) the reference to any conditions in Article 34 being met is a reference to any conditions in that Article that, but for the transfer, would have been met in relation to the scheme.

(7) Nothing in Article 35A or this Article is to be read as preventing the Regulator from issuing a contribution notice in relation to the initial scheme.

(8) Regulations may make provision applying, with or without modifications, any provision made by or under Article 35A or this Article in relation to any scheme or other arrangement in any case where the accrued rights of persons who were members of the initial scheme are transferred or extinguished directly or indirectly in consequence of or otherwise in connection with—

(a) the making of any payment at any time to or for the benefit of the scheme or other arrangement,

(b) the transfer of any asset at any time to or for the benefit of the scheme or other arrangement,

(c) the discharge (wholly or partly) at any time of any liability incurred by or on behalf of the scheme or other arrangement, or

(d) the incurring at any time of any obligation to do any act falling within sub-paragraphs (a) to (c).

(9) Any reference in paragraph (8)(a) to (d) to the doing of an act of any description at any time in relation to the scheme or other arrangement includes a reference to the doing of an act of that description at any previous time in relation to any other scheme or other arrangement.

(10) Regulations under paragraph (8) may—

(a) make provision having effect in relation to any case where rights are transferred or extinguished on or after the date on which the Department publishes a statement of the intention to make the regulations; and

(b) without prejudice to Article 287(3), make consequential provision applying with modifications any provision of this Order which relates to contribution notices under Article 34.]

F24 Arts. 35A, 35B inserted (15.12.2008) by Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13), ss. 103, 118(1)(2)(h)(3)(a)(v)(vi)(b), Sch. 8 para. 9 (with Sch. 8 para. 15(3) and transitional provision in Sch. 8 para. 16(1) for art. 35B(8)(10)(a))

Content and effect of an Article 34 contribution notice N.I.

36 .F25 —(1) This Article applies where a contribution notice is issued to a person under Article 34.

(2) The contribution notice must—

(a) contain a statement of the matters which it is asserted constitute the act or failure to act which falls within paragraph (5) of Article 34,

(b) specify the sum which the person is stated to be under a liability to pay, and

(c) identify any other persons to whom contribution notices have been or are issued as a result of the act or failure to act in question and the sums specified in each of those notices.

[F26 (2A) Without prejudice to paragraphs (3) and (7), the contribution notice must also specify a date for the purposes of Articles 38A(2) and 38B(2) (sanctions for failure to comply with a contribution notice).]

(3) Where the contribution notice states that the person is under a liability to pay the sum specified in the notice to the trustees or managers of the scheme, the sum is to be treated as a debt due from the person to the trustees or managers of the scheme.

(4) In such a case, the Regulator may, on behalf of the trustees or managers of the scheme, exercise such powers as the trustees or managers have to recover the debt.

(5) But during any assessment period (within the meaning of Article 116) in relation to the scheme, the rights and powers of the trustees or managers of the scheme in relation to any debt due to them by virtue of a contribution notice are exercisable by the Board to the exclusion of the trustees or managers and the Regulator.

(6) Where, by virtue of paragraph (5), any amount is paid to the Board in respect of a debt due by virtue of a contribution notice, the Board must pay the amount to the trustees or managers of the scheme.

(7) Where the contribution notice states that the person is under a liability to pay the sum specified in the notice to the Board, the sum is to be treated as a debt due from the person to the Board.

(8) Where the contribution notice so specifies, the person to whom the notice is issued ( “P”) is to be treated as jointly and severally liable for the debt with any persons specified in the notice who are persons to whom corresponding contribution notices are issued.

(9) For the purposes of paragraph (8), a corresponding contribution notice is a notice which—

(a) is issued as a result of the same act or failure to act falling within paragraph (5) of Article 34 as the act or failure as a result of which P's contribution notice is issued,

(b) specifies the same sum as is specified in P's contribution notice,

[F27 (ba) specifies the same date for the purposes of Articles 38A(2) and 38B(2) as is specified in P's contribution notice,] and

(c) specifies that the person to whom the contribution notice is issued is jointly and severally liable with P, or with P and other persons, for the debt in respect of that sum.

(10) A debt due by virtue of a contribution notice is not to be taken into account for the purposes of Article 75(2) and (4) of the 1995 Order (deficiencies in the scheme assets) when ascertaining the amount or value of the assets or liabilities of a scheme.

F25 mod. by SR 2005/378

F26 Art. 36(2A) inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 5(1)(a); S.R. 2021/271, art. 2(3)(c) (with art. 3(1)-(3))

F27 Art. 36(9)(ba) inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 5(1)(b); S.R. 2021/271, art. 2(3)(c) (with art. 3(1)-(3))

Article 34 contribution notice: relationship with employer debt N.I.

37 .F28 —(1) This Article applies where a contribution notice is issued to a person ( “P”) under Article 34 and condition A or B is met.

(2) Condition A is met if, at the time at which the contribution notice is issued, there is a debt due under Article 75 of the 1995 Order (deficiencies in the scheme assets) from the employer—

(a) to the trustees or managers of the scheme, or

(b) where the Board has assumed responsibility for the scheme in accordance with Chapter 3 of Part III (pension protection), to the Board.

(3) Condition B is met if, after the contribution notice is issued but before the whole of the debt due by virtue of the notice is recovered, a debt becomes due from the employer to the trustees or managers of the scheme under Article 75 of the 1995 Order.

(4) The Regulator may issue a direction to the trustees or managers of the scheme not to take any or any further steps to recover the debt due to them under Article 75 of the 1995 Order pending the recovery of all or a specified part of the debt due to them by virtue of the contribution notice.

(5) If the trustees or managers fail to comply with a direction issued to them under paragraph (4), Article 10 of the 1995 Order (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.

(6) Any sums paid—

(a) to the trustees or managers of the scheme in respect of any debt due to them by virtue of the contribution notice, or

(b) to the Board in respect of any debt due to it by virtue of the contribution notice,

are to be treated as reducing the amount of the debt due to the trustees or managers or, as the case may be, to the Board under Article 75 of the 1995 Order.

(7) Where a sum is paid to the trustees or managers of the scheme or, as the case may be, to the Board in respect of the debt due under Article 75 of the 1995 Order, P may make an application under this paragraph to the Regulator for a reduction in the amount of the sum specified in P's contribution notice.

(8) An application under paragraph (7) must be made as soon as reasonably practicable after the sum is paid to the trustees or managers or, as the case may be, to the Board in respect of the debt due under Article 75 of the 1995 Order.

[F29 (8A) An application under paragraph (7) may not be made after—

(a) the date specified under Article 36(2A) for the purposes of Articles 38A(2) and 38B(2) (sanctions for failure to comply with a contribution notice), or

(b) if a different date has effect instead of that date (see paragraphs (10A) and (11B)), that different date.]

(9) Where such an application is made to the Regulator, the Regulator may, if it is of the opinion that it is appropriate to do so—

(a) reduce the amount of the sum specified in P's contribution notice by an amount which it considers reasonable, and

(b) issue a revised contribution notice specifying the revised sum.

(10) For the purposes of paragraph (9), the Regulator must have regard to such matters as the Regulator considers relevant including, where relevant, the following matters—

(a) the amount paid in respect of the debt due under Article 75 of the 1995 Order since the contribution notice was issued,

(b) any amounts paid in respect of the debt due by virtue of that contribution notice,

(c) whether contribution notices have been issued to other persons as a result of the same act or failure to act falling within paragraph (5) of Article 34 as the act or failure as a result of which P's contribution notice was issued,

(d) where such contribution notices have been issued, the sums specified in each of those notices and any amounts paid in respect of the debt due by virtue of those notices,

(e) whether P's contribution notice specifies that P is jointly and severally liable for the debt with other persons, and

(f) such other matters as may be prescribed.

[F30 (10A) Where an application under paragraph (7) is made to the Regulator, the Regulator may, if it is of the opinion that it is appropriate to do so—

(a) change the date that has effect for the purposes of Articles 38A(2) and 38B(2) (whether specified in the contribution notice or an earlier revised contribution notice), and

(b) specify the revised date in the revised contribution notice issued under paragraph (9)(b) or, if the Regulator does not issue a revised contribution notice under paragraph (9)(b), issue a revised contribution notice specifying the revised date.]

(11) Where—

(a) P's contribution notice specifies that P is jointly and severally liable for the debt with other persons, and

(b) a revised contribution notice is issued to P under paragraph (9) specifying a revised sum,

the Regulator must also issue revised contribution notices to those other persons specifying the revised sum and their joint and several liability with P for the debt in respect of that sum.

[F31 (11A) Paragraph (11B) applies where—

(a) P's contribution notice specifies that P is jointly and severally liable for the debt with other persons, and

(b) the Regulator issues a revised contribution notice to P under paragraph (9)(b) or (10A)(b) specifying a revised date for the purposes of Articles 38A(2) and 38B(2).

(11B) Where this paragraph applies, the Regulator must—

(a) change the date that has effect for the purposes of Articles 38A(2) and 38B(2) in the case of the contribution notices or revised contribution notices issued in respect of the debt to those other persons, and

(b) specify the revised date in the revised contribution notices issued to those other persons under paragraph (11) or, if the Regulator does not issue revised contribution notices under paragraph (11), issue revised contribution notices to those other persons specifying the revised date.]

(12) For the purposes of this Article—

(a) references to a debt due under Article 75 of the 1995 Order include a contingent debt under that Article, and

(b) references to the amount of such a debt include the amount of such a contingent debt.

F28 mod. by SR 2005/378

F29 Art. 37(8A) inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 5(2)(a); S.R. 2021/271, art. 2(3)(c) (with art. 3(1)-(3))

F30 Art. 37(10A) inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 5(2)(b); S.R. 2021/271, art. 2(3)(c) (with art. 3(1)-(3))

F31 Art. 37(11A)(11B) inserted (1.10.2021) by Pension Schemes Act 2021 (c. 1), s. 131(2)(b), Sch. 8 para. 5(2)(c); S.R. 2021/271, art. 2(3)(c) (with art. 3(1)-(3))

Article 34 contribution notice: clearance statements N.I.

38 .F32 —(1) An application may be made to the Regulator under this Article for the issue of a clearance statement within sub-paragraph (a), (b) or (c) of paragraph (2) in relation to circumstances described in the application.

(2) A clearance statement is a statement, made by the Regulator, that in its opinion in the circumstances described in the application—

(a) the applicant would not be, for the purposes of paragraph (3)(a) of Article 34, a party to an act or a deliberate failure to act falling within paragraph (5)(a) of that Article,

(b) it would not be reasonable to impose any liability on the applicant under a contribution notice issued under Article 34, or

(c) such requirements of that Article as may be prescribed would not be satisfied in relation to the applicant.

(3) Where an application is made under this Article, the Regulator—

(a) may request further information from the applicant;

(b) may invite the applicant to amend the application to modify the circumstances described.

(4) Where an application is made under this Article, the Regulator must as soon as reasonably practicable—

(a) determine whether to issue the clearance statement, and

(b) where it determines to do so, issue the statement.

(5) A clearance statement issued under this Article binds the Regulator in relation to the exercise of the power to issue a contribution notice under Article 34 to the applicant unless—

(a) the circumstances in relation to which the exercise of the power under that Article arises are not the same as the circumstances described in the application, and

(b) the difference in those circumstances is material to the exercise of the power.

F32 mod. by SR 2005/378