When an Insolvency Practitioner (“IP”) is appointed as an Administrator over a company that is a Trustee of an Occupational Pension Scheme, we have seven days from our appointment to notify the Pension Protection Fund (“PPF”) of the Administration taking place and provide them with details as to any monies due to the scheme.
In the wake of the Lehman Brothers/Nortel case, there was a time when it looked as if Pre-Administration pension deficits would be an expense of an Administration, however the Court eventually ruled that any such deficit would instead rank as a provable debt in the insolvency. This was a relief all round, as it could have seriously affected the possibility of rescuing some businesses through an Administration procedure.
In the past, having to consider a company’s pension scheme has rarely applied, so it’s a simple box to tick on our ‘to do’ list of statutory duties. However with the recent Auto Enrolment changes to the law, it is more likely that pension schemes will be in place for a lot of the companies that we deal with.
The Pensions Regulator will issue compliance notices requiring an employer to remedy any missed contributions, can issue penalty notices for compliance failures and may also issue court proceedings to recover any such unpaid penalties.
For IPs acting as Administrators we have to put right any noncompliance within 14 days of our appointment. After 14 days we adopt the employee contracts and have to comply with Auto Enrolment requirements. We are subject to civil and criminal proceedings if we cause compliance failures.
In addition to all of the red tape requirements, we have to think about the extra 1% contribution we now need to find in order to pay any pension contributions due during the period of our appointment for any schemes in place.