Pensions Act 2004

Commentary on Sections

Part 7 – Cross-Border Activities Within European Union

Summary

UK occupational pension scheme receiving contributions from European employer

Section 289: Approval in relation to particular European employer

1157.Once a pension scheme provider has received general authorisation for cross-border activities, it must identify the specific employer(s) from whom it wishes to receive contributions. At this stage, the trustees or managers of the occupational scheme in question must obtain the approval of the Regulator to accept contributions from the specified employer or employers. The trustees or managers of a scheme that intends to operate cross-border must notify the Regulator of their intention to do so.

1158.Subsection (1) provides that the information contained in this ‘notice of intention’ is to include details of the prospective employer (the “specified employer”), the host Member State, the intention (subject to approval under this section) to accept the contributions and any other prescribed information. The prescribed information will include details of the main characteristics of the scheme. Regulations will specify what information will be needed to constitute the scheme’s main characteristics together with the manner in which this information is to be provided to the Regulator.

1159.The process undertaken before commencing cross-border activity is therefore a two stage process, with the first stage being the general authorisation process set out at section 288 and the second stage being the specific approval process set out at section 289. It should be noted, however, that although the overall accreditation process has two stages, a prospective cross-border scheme will have the option to apply simultaneously to the Regulator for both general authorisation and employer-specific approval.

1160.Subsection (2) provides that within 3 months of receiving the notice of intention, the Regulator must, if satisfied those giving the notice meet prescribed requirements, inform the appropriate regulatory authority of the Member State in which the prospective employer is located of the notice and its contents and notify those who gave the notice of intention as to whether they are approved or not for the purposes of this section. The Regulator does not have to pass on this information if, in accordance with Article 20(4) of the Directive, it has reason to doubt that aspects of the pension scheme or those operating it will be compatible with the proposed cross-border operation. The decision whether or not to refuse to pass on such information is an integral part of the approval process. Regulations will prescribe the circumstances in which the Regulator will not be required to take this action, in accordance with the provisions of Article 20(4) of the Directive.

1161.The Regulator will be required to inform the scheme’s trustees or managers of what course of action it has taken, whether by passing on the information if it approves the proposal or by notifying the trustees or managers of its refusal to pass on that information. However, subsection (3) provides that if the Regulator does fail to notify the scheme of its decision within the period of 3 months after the Regulator received the notice of intention, the scheme can proceed on the basis that it is approved.

1162.Subsection (4) provides that regulations can specify the process and criteria the Regulator must follow when revoking an authorisation previously granted under this section.