Pensions Act 2004

Commentary on Sections

Part 1 – the Pensions Regulator

Financial support directions

Section 50: Section 47 contribution notice: relationship with employer debt

192.This section deals with the situation where there is an outstanding debt due under section 75 of the Pensions Act 1995 (deficiencies in the assets) from the employer in relation to the scheme at the same time as an outstanding debt due to the scheme under a section 47 contribution notice. The Regulator will have power to direct the trustees or managers of the scheme from recovering the section 75 debt pending recovery of the debt due by virtue of the contribution notice where it would not be sensible for both to happen at once.

193.Subsection (1) states that this section applies where a contribution notice is issued to a person under section 41 and condition A or B is met as set out in subsection (2) or (3). Subsection (2) sets out condition A. This is when there is a section 75 debt due from the employer in relation to the scheme to the trustees or managers of the scheme or the Board of the Pension Protection Fund at the time the contribution notice is issued. Subsection (3) sets out condition B. This is when a section 75 debt becomes due from the employer in relation to the scheme after the contribution notice has been issued and before the debt under the contribution notice has been paid.

194.Subsection (4) states that the Regulator can direct the trustees or managers not to recover the debt due under section 75 of the Pensions Act 1995 (deficiencies in the assets) pending the recovery of the contribution notice debt. Subsection (5) provides for section 10 of the Pensions Act 1995 (civil penalties) to apply where trustees or managers of a scheme fail to comply with a direction issued to them under subsection (4).

195.Subsection (6) provides that any sums paid to the trustees or managers of the scheme or the board of the Pension Protection Fund as a result of the contribution notice are to be treated as reducing the debt under section 75 of the Pensions Act 1995. Subsection (7) provides that where a payment is made in respect of a section 75 debt then the person to whom a contribution notice is issued may ask the Regulator to reduce the amount that has to be paid under the contribution notice.

196.Subsection (8) provides that an application under subsection (7) must be made as soon as reasonably practicable after a payment is made. Subsection (9) provides that the Regulator may reduce the amount that has to be paid under the contribution notice and issue a revised contribution notice specifying the revised sum.

197.Subsection (10) provides that the Regulator must consider a number of factors when considering whether to reduce the amount payable under the contribution notice.

198.Subsection (11) states that where the person to whom the revised contribution notice is issued was originally jointly and severally liable for the debt with other persons the Regulator must also issue a revised contribution notice to those other persons specifying the revised sum and their joint and several liability with the person for the sum of the debt.