The Pension Regulator's new powers: what UK lenders need to know
Updated November 2021
The Pension Schemes Act 2021 (the Act) gives tPR significant new powers to intervene where the security of defined benefit (DB) pensions may be at risk. These new powers include an expansion of the moral hazard powers and an extension of the “notifiable events” framework. The Act also creates new criminal offences and liability for civil fines of up to £1m.
Many of tPR's new powers came into force on 1 October 2021.
Lenders to corporate groups with DB schemes should understand the impact that the new provisions could have for structuring lending and on a borrower’s ability to agree to changes to its capital structure or grant new credit support in the context of a restructuring. The wide scope of the new offences means that lenders should take careful advice to ensure transactions are structured in a way that takes into account tPR’s expectations in relation to the security of DB funding.
This note considers the implications for lenders of:
- the new criminal offences and civil fines;
- tPR’s extended moral hazard (contribution notice) powers; and
- the extension of the “notifiable events” which must be notified to tPR.
Authored by the Pensions Team.
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