UK - The government has cut the time period the pensions regulator has to issue contribution notices to prevent the department for work and pensions being sued.
The rules – aimed at preventing schemes dumping their liabilities on the Pension Protection Fund – allow the regulator to issue contribution notices, restoration orders or “deliberate failure to act” orders.
However, pensions minister Baroness Hollis told the Lords the initial proposal to backdate actions that occurred on or after June 11, 2003 would have opened the department for work and pensions up to a series of lawsuits because the announcement had not been “sufficiently clear”.
On that date, the former work and pensions secretary Andrew Smith made a general statement about the government’s intention to avoid moral hazard, but it was only on April 27 that a more specific announcement on the changes was made.
Hollis said the potential litigation could have “tied up” the regulator in court for a number of years – reducing its ability to protect members of the PPF.
She added: “I believe that everyone feels that there is now a fair and reasonable playing field.”
Conservative and Liberal Democrat pensions spokesmen, Lords Higgins and Oakeshott – who had tabled similar amendments to the Bill – welcomed the change.
Hammonds partner Francois Barker said: “This is definitely the right move for the government because it announced the moral hazard provisions on April 27. Therefore it is only right to judge corporate actions after that date, not before it.”
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