New Moral Hazard Powers For Pensions Regulator

The Government tabled amendments to the Pensions Bill yesterday that will change the moral hazard framework (ie when the Pensions Regulator can look to non-employer parties in a corporate group to make payments to underfunded pension schemes).

Current position

Under the existing legislation, the Regulator can issue a contribution notice requiring a wide range of people associated or connected with scheme employers to contribute a specified amount to the scheme if one of the main purposes of an action was either to prevent the recovery of all or part of a section 75 debt or, otherwise than in good faith, to compromise, settle, reduce or prevent such a debt becoming due.

In April this year, the Government announced its intention to extend the Regulator's moral hazard powers to adapt to the evolving pensions market. The proposed changes included introducing an alternative test that could trigger the issue of a contribution notice where a course of conduct is