Pensions Act 2004

Pensions Act 2004

2004 CHAPTER 35

Commentary on Sections

Part 1 – the Pensions Regulator

Contribution notices where avoidance of employer debt

Section 40: Content and effect of a section 38 contribution notice

145. This section makes provision in respect of the content and effect of contribution notices under section 38. It requires the contribution notice to contain a statement of the matters which it is asserted constitute the act or failure to act which falls within section 38(5). The Regulator can decide to impose joint and several liabilities on recipients of contribution notices in certain circumstances where more than one contribution notice has been issued as a result of the same act or failure to act. The section also provides that the contribution is a debt due to the trustees or managers of the scheme. It also deals with the situation where the Board of the Pension Protection Fund has become involved with the scheme during an assessment period, in which case it will take over enforcement of the debt under the contribution notice from the trustees or managers and the Regulator.

146. Subsection (2) sets out what matters the contribution notice should contain. The notice must specify the act or failure to act, the amount of the debt, and a list of persons to whom the contribution notices have been issued as a result of the same act or failure to act.

147. Subsection (3) provides that, where the contribution notice states that the person is under a liability to pay the sum specified to the trustees or managers of the scheme, the sum is to be a debt due from the person to the trustees or managers. Subsection (4) allows the Regulator in such a case to exercise the same powers as the trustees or managers of the scheme in recovering this debt.

148. Subsection (5) states that, during the assessment period (as defined in section 132), the Board of the Pension Protection Fund can exercise the rights and powers that the Regulator or the trustees or managers would normally have in respect of the recovery of the sum specified in the contribution notice. Subsection (6) provides for any debt paid in such a case to the Board during an assessment period, to be paid over to the trustees or managers of the scheme.

149. Subsection (7) provides that, where the contribution notice states that the person is under a liability to pay the sum specified to the Board, the sum is to be a debt due from the person to the Board.

150. Subsection (8) provides that a notice may state that the person issued with the contribution notice is jointly and severally liable for the debt with any other person specified in the notice as a person to whom a “corresponding contribution notice” is issued. Subsection (9) sets out the meaning of a “corresponding contribution notice”.

151. Subsection (10) states that a debt due under a contribution notice should not be taken into account when calculating the assets and liabilities of the scheme in relation to section 75(2) and (4) of the Pensions Act 1995 (deficiencies in the assets).