Date 22 September 2009
It has been reported that during 2008, the PPF and The Pensions Regulator reported over 200 insolvency practitioners to their professional body for failing to advise the PPF and The Pension Regulator about the pension schemes of insolvent companies.
In the last few months the Pension Protection Fund (PPF) has updated its guidance to Insolvency Practitioners and launched an updated online reporting system for insolvency practitioners. The PPF’s “Guidance for Insolvency Practitioners and Official Receivers” is also available online.
The guide has been drawn up to assist insolvency practitioners (IP’s) and official receivers’ dealings with the PPF in the event that an employer, with an occupational pension scheme, suffers (or is about to suffer) an insolvency event.
The guide touches on the following points:
- Pension scheme creditors’ rights;
- The potential role and assistance of the PPF in the restructuring of an insolvent employer’s business;
- When insolvency practitioners should notify the PPF of an insolvency related event; and
- Dealing with enquiries from employees and pensioners during an assessment period
Under the Pensions Act 2004 insolvency practitioners have two weeks to file an “s.120 Notice” with the regulator, the PPF and the trustees and managers of the scheme following their appointment or of becoming aware that the employer was sponsor of an occupational pension scheme.
There are industry concerns that while the new system meets IP's regulatory reporting responsibilities it does not fully discharge a practitioner's full responsibility towards employer sponsored pension schemes in a formal insolvency.
IP's should not assume that they have met all their obligations. During the recession employer's financial commitment to their schemes are more likely to breached, with disastrous consequences.
It is not uncommon for the pension scheme to be the largest creditor in a formal insolvency. IP’s should take great care with this area; there is more to consider then simply reporting pension schemes to the PPF and Pensions Regulator.
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© SA LAW 2009
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