In light of the onset of auto enrolment, the Pensions Regulator is consulting on revising its codes of practice for reporting late payments of contributions into DC pension arrangements.
The Regulator proposes amending the two existing codes of practice to include practical guidance on the obligation to prepare a contributions schedule (for occupational DC arrangements) or to prepare a direct payment arrangement (for contract based arrangements).
In addition, the main changes proposed are as follows:
- Trustees must still report a material payment failure to the Regulator and members within a "reasonable period" of the failure arising. The duty to report will arise where the trustees have reasonable cause to believe the employer is "not willing to pay the outstanding contributions", rather than after 90 days as is required now. To assist, the Regulator says that where contributions remain outstanding for 120 days after the due date this is to be treated as evidence of unwillingness to pay, and triggers a duty to report by itself. However, reports can be triggered within 90 days where trustees decide that the "not willing" test is met.
- The code makes clear that while infrequent one-off payment failures do not trigger a duty to report, occasional failures must still be remedied within 120 days of the due date.
- The "reasonable period" within which the Regulator would expect a report will remain ten working days after the trustees have reasonable cause to believe that a material payment failure has arisen. An immediate report still must be made if there is an imminent danger to members' or an employer's payments.
- Members will have to be informed of the material payment failure at the same time as the Regulator, rather than within 30 days of the end of the current 90 day period as is presently required.
- The Regulator is introducing standardised reporting of material payment failures. Details will be listed in supporting guidance to be published. Consultation on the draft revised codes and supporting guidance runs until 6 December 2012.
Click here for a copy of the consultation.
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