Delay in Notifiable Events regulations: continued uncertainty for DB sponsors

In September 2021, the DWP issued a consultation on extending the list of corporate events that employers are required to notify the Pensions Regulator of - and introducing the requirement for an ‘Accompanying Statement’ in some circumstances.

The industry had been expecting a response to this consultation to have been published by March 2022, along with the final regulations. There was an understanding that the new requirements would be operational by this April, and a number of DB sponsors have been working to that date in respect of meeting the new requirements for planned upcoming corporate activity.

However, the latest indications are that the DWP’s response to the consultation and final regulations will be delayed for some weeks, and that a consultation on a Pensions Regulator Code and guidance will follow. The expectation is that the new regulations will be effective from October 2022 [August 2022 update: It now appears the regulations could be further delayed beyond October].

The delay is frustrating as it leads to a further period of uncertainty for DB sponsors undertaking corporate activity over the remainder of the year which could fall into the scope of the new notifiable events framework and/or require an Accompanying Statement. Trustees of such schemes are also left in limbo – with potentially less leverage to push for information on these upcoming events in some circumstances.

We hope that this delay will at least lead to a revised set of regulations which address some of the practical concerns raised by the industry in responses to the September consultation on the first draft of the regulations. Namely around the opacity of the timing requirements and the definitions of materiality (for more detail see our previous Viewpoint article here). It will be important to ensure that the new requirements do not inappropriately impact on day-to-day business activity and that TPR is not inundated with unnecessary notices and statements.

In the meantime, DB sponsors should be assuming that the new requirements will come into force in substantively the same form as the first consultation, in Q3 2022, and factoring these requirements into plans for any upcoming corporate activity (in particular: changes in ownership; business disposals; and changes in secured lending). Sponsors will also need to continue being mindful of the need to consider the impact of any such activity on the covenant afforded to the scheme through the lens of the tougher regulator powers which have been in effect from 1 October 2021 – the new criminal offences and new contribution notice triggers.

Trustees should also ensure that their sponsors are aware of the upcoming extension to the list of notifiable events and the requirement for an Accompanying Statement in some cases– and that these (as a minimum) are factored into information sharing agreements with their sponsors. It will be particularly important for Trustees to remind sponsors of this where the sponsor has shared business plans that indicate that plans are afoot for corporate activity later in the year. And where Trustees are aware of upcoming corporate activity, they should be ensuring that they are ready to independently assess the impact of such activity on the sponsor’s covenant (whether the activity falls under the new notifiable events or not).