The Pensions Regulator has issued a reminder to insolvency practitioners it is now up to the regulator to appoint independent trustees when an employer enters insolvency, not the practitioners.
Before the Pensions Act 2004, the responsibility for appointing an independent trustee to a pension scheme belonged to the insolvency practitioner, but since the Act came into force in April this year, the responsibility has been transferred to the Pensions Regulator.
The organisation now selects independent trustees from its trustee register, who are rigorously vetted to ensure that they have the appropriate skills to protect members' benefits through the insolvency process.
Clive Pugh, trustee services manager at the Pensions Regulator, says it is possible some insolvency practitioners may be unaware of the regulator's new powers, and are continuing to make their own trustee appointments.
He adds the Regulator wishes to work together with the industry to dispel any remaining uncertainty, as they believe it is not sufficient for insolvency firms to select trustees from the register.
He continues it is the Regulator’s role to do that and make the appointment, as they have specific statutory powers that the insolvency practitioners do not, and are best placed to use the powers to protect members' benefits.
The Regulator says its primary aim is to help insolvency practitioners comply with the new legislation, but it also has the power to issue an improvement notice where insolvency practitioners have failed to do so. The regulator can also remove the trustee appointed and replace them with an alternative trustee.
Clive Pugh continues: “Insolvency practitioners must comply with the Pensions Act, and ensure that they tell us when a company becomes insolvent. We are already having productive talks with the Association of Business Recovery Professionals to raise industry awareness about this issue and we expect that this will increase the number of reports made."
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