The principal purpose of the notifiable events framework is to give The Pensions Regulator early warning of possible calls on the Pension Protection Fund - this guidance to be read in conjunction with 'code of practice 02: notifiable events'.
Code in force: April 2005
About the framework
The principal purpose of the notifiable events framework is to give the Pensions Regulator early warning of possible calls on the Pension Protection Fund.
There are two circumstances which, when combined, may lead to compensation being payable from the Pension Protection Fund:
- when a sponsoring employer becomes insolvent (or, to be more precise, suffers a qualifying insolvency event); and
- when the funding level of the scheme sponsored by the employer is below the Pension Protection Fund buy-out level (ie the level of scheme funding which would be required to provide scheme members with the amount of compensation to be offered by the Pension Protection Fund).
The notifiable events framework is intended to provide early warning of each of these circumstances. View a diagram that illustrates this framework (PDF).
Please note that the following events are no longer reportable from 6 April 2009:
- significant change in company credit rating;
- changes in senior employer personnel; and
- changes in key scheme posts.
How is the framework implemented?
There are three main components of the notifiable events framework under section 69 of the Pensions Act 2004:
- The events which are to be notified - these are in regulations made by the Department for Work and Pensions.
- The exceptions to the duty to notify - these are in directions issued by the Pensions Regulator (PDF).
- Practical guidance on the notifiable events framework and the standard of conduct and practice expected of trustees and employers in complying - this is in the Pensions Regulator's code of practice on notifiable events (PDF).
Who is required to notify?
Trustees are required to notify, in writing, in respect of pension schemes. These are known as scheme-related events.
Employers are required to notify, in writing, in respect of their pension schemes. These are known as employer-related events.
Notification is only required in respect of those schemes and their employers which could be eligible for Pension Protection Fund compensation and which pay the Pension Protection Fund levies. Generally speaking this means all defined benefit schemes and the defined benefit element of hybrid schemes.
Notification is not required in respect of schemes and their employers which are wholly money purchase or which are ineligible for the Pension Protection Fund because, for example, they are in the public sector.
Exceptions to the requirement to notify
One condition applies to a number of scheme-related and employer-related events: notification is not required if the scheme in question is funded above the Pension Protection Fund buy-out level (or the MFR if no Pension Protection Fund-based valuation is available), and there has been no report to the Pensions Regulator of a failure to adhere to the schedule of contributions.
One condition applies to a specific event: decisions by trustees resulting in non-payment of debt.
In deciding whether to notify, trustees and employers should consider three questions:
- Has a notifiable event occurred?
- Is notification of the event subject to conditions (see table of conditions (PDF))?
- Are all the conditions met?
If a notifiable event has occurred, you should notify unless the answers to questions 2 and 3 above are 'yes'.