CNS meaning

The Pensions Regulator (the Regulator) The Regulator is an arm’s-length public body set up under the Pensions Act 2004 (PeA 2004). Its authority to impose contribution notices and financial support directions appears in PeA 2004, ss 38–50. Although the Act does not use the label, these provisions are widely known as the Regulator’s ‘moral hazard’ powers. Their purpose is to counter the ‘moral hazard’ arising from the Pension Protection Fund (PPF): the possibility that corporate groups might organise their structures so as to heighten exposure within their pension schemes, comfortable that the PPF would intervene if the employer entered insolvency. The principal moral hazard tools—and the only ones exercised so far—are the power to issue a contribution notice (CN) and the power to issue a financial support direction (FSD). A CN compels the recipient to pay a specified amount into a defined benefit occupational pension scheme. A CN can be issued where the criteria in PeA 2004, s 38 are satisfied. These mechanisms exist to deter behaviour that would...

This practice note relates solely to defined benefit occupational pension schemes. The Pensions Regulator's moral hazard powers The Pensions Act 2004 (PeA 2004) granted the then newly established Pensions Regulator a broad suite of powers. Foremost among these, and the most groundbreaking, were the moral hazard measures set out in sections 38–54 of the PeA 2004. These moral hazard powers—also referred to as anti-avoidance powers—allow the Pensions Regulator to challenge schemes aimed at evading pension funding duties and, ultimately, in turn, limit the Pension Protection Fund’s (PPF) potential exposure. In specified situations, the Pensions Regulator may even look beyond corporate structures and also allocate pension liabilities to third parties that are connected with, or associated with, a scheme’s sponsoring employer...

The Pension Schemes Act 2021 On 11 February 2021, the Pension Schemes Act 2021 (PSA 2021) obtained Royal Assent. It amends the Pensions Act 2004 (PA 2004), introducing measures with significant consequences for corporate and restructuring transactions involving companies or groups that run UK defined benefit schemes, including: Two criminal offences—‘avoidance of employer debt’ and ‘risking accrued scheme benefits’—effective from 1 October 2021. This Practice Note addresses these offences. Broader grounds for the Pensions Regulator (TPR) to issue a contribution notice (CN) under its moral hazard powers, making third parties liable to help fund a scheme deficit, via two new threshold tests: the ‘employer insolvency test’ and the ‘employer resources test’. These also took effect on 1 October 2021. For an overview of CNs, see Practice Note: Contribution Notices. Expanded information-gathering powers for TPR, including the ability to require any person to attend an interview and to inspect records at a party’s premises, with penalties for non-compliance and for giving false and misleading information....