C3Part 1The Pensions Regulator
Contribution notices where avoidance of employer debt
C2C141C2Section 38 contribution notice: relationship with employer debt
I11
This section applies where a contribution notice is issued to a person (“P”) under section 38 and condition A or B is met.
I12
Condition A is met if, at the time at which the contribution notice is issued, there is a debt due under section 75 of the Pensions Act 1995 (“the 1995 Act”) (deficiencies in the scheme assets) from the employer—
a
to the trustees or managers of the scheme, or
b
where the Board of the Pension Protection Fund has assumed responsibility for the scheme in accordance with Chapter 3 of Part 2 (pension protection), to the Board.
I13
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 section 75 of the 1995 Act.
I14
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 section 75 of the 1995 Act pending the recovery of all or a specified part of the debt due to them by virtue of the contribution notice.
I15
If the trustees or managers fail to comply with a direction issued to them under subsection (4), section 10 of the 1995 Act (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.
I16
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 section 75 of the 1995 Act.
I17
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 section 75 of the 1995 Act, P may make an application under this subsection to the Regulator for a reduction in the amount of the sum specified in P’s contribution notice.
I18
An application under subsection (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 section 75 of the 1995 Act.
F18A
An application under subsection (7) may not be made after—
a
the date specified under section 40(2A) for the purposes of sections 42A(2) and 42B(2) (sanctions for failure to comply with a contribution notice), or
b
if a different date has effect instead of that date (see subsections (10A) and (11B)), that different date.
I19
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 subsection (9), the Regulator must have regard to such matters as the Regulator considers relevant including, where relevant, the following matters—
I1a
the amount paid in respect of the debt due under section 75 of the 1995 Act since the contribution notice was issued,
I1b
any amounts paid in respect of the debt due by virtue of that contribution notice,
I1c
whether contribution notices have been issued to other persons as a result of the same act or failure to act falling within subsection (5) of section 38 as the act or failure as a result of which P’s contribution notice was issued,
I1d
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,
I1e
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.
F210A
Where an application under subsection (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 sections 42A(2) and 42B(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 subsection (9)(b) or, if the Regulator does not issue a revised contribution notice under subsection (9)(b), issue a revised contribution notice specifying the revised date.
I111
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 subsection (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.
F311A
Subsection (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 subsection (9)(b) or (10A)(b) specifying a revised date for the purposes of sections 42A(2) and 42B(2).
11B
Where this subsection applies, the Regulator must—
a
change the date that has effect for the purposes of sections 42A(2) and 42B(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 subsection (11) or, if the Regulator does not issue revised contribution notices under subsection (11), issue revised contribution notices to those other persons specifying the revised date.
I112
For the purposes of this section—
a
references to a debt due under section 75 of the 1995 Act include a contingent debt under that section, and
b
references to the amount of such a debt include the amount of such a contingent debt.
Pt. 1 applied in part (with modifications) (20.7.2005 for specified purposes, 1.9.2005 for specified purposes, 5.12.2005 for specified purposes) by The Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986), regs. 1(1), 4, Sch. 1 Pt. 1 (as amended (17.7.2008) by The Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2008 (S.I. 2008/1903), regs. 1, 5(2), 13; (10.7.2009) by The Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2009 (S.I. 2009/1851), regs. 1, 5, 18; (2.4.2010) by The Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010 (S.I. 2010/1149), regs. 1, 5, 15)