The Pensions Regulator

Reporting breachesComplying with the duty to report breaches of the law

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Examples of green breach situations

• Breaches, not involving dishonesty, in schemes where all the members are trustees or directors of the sponsoring employer and their relatives and therefore largely control actions (or lack of action) in relation to the scheme. [Because the cause is not dishonesty and the effect falls only on those persons who make decisions in relation to the scheme. The Pensions Regulator's concerns are with situations where benefits are under the control of trustees (or a manager) for the benefit of others.]
• Occasional administrative lapses in an otherwise well run scheme, for example which arise due to a systems failure or a change in adviser, and which are corrected in a timely manner when identified. For example:
  • an auditor's statement on contributions or audited accounts obtained within a relatively short period after the seven-month legislative deadline;
  • failure to invest a month's contributions promptly, in accordance with the scheme's procedures;
  • failure to pay a member's benefits correctly or in a timely manner;
  • failure to provide a member with timely or correct information, for example, a cash equivalent transfer value quotation or estimate, or an annual benefit statement to a member of a defined-contribution scheme; or
  • failure to issue the annual benefit statements on time to members of a defined-contribution scheme following a change of scheme administrator.
  In all the above cases, the trustees or manager, in conjunction with their advisers and service providers must be taking appropriate action to put matters right as quickly as possible and prevent recurrence. [The effects of the breaches are not serious nor does their cause seem to be poor governance on the part of the trustees, who are reacting appropriately.]
• Failure to adhere precisely to the detail of the legislation where the breach is unlikely to result in an error or misunderstanding, for example:
  • inconsequential and corrected omissions from the records of trustees' meetings;
  • a minor defect in a professional adviser's appointment documentation, provided this has been corrected, such as a failure to specifically state the date from which the appointment is effective; or
  • minor breaches of investment guidelines, for example, through dealing or implementation errors or movements in the markets, where the breach is remedied within a reasonable period of time and, where relevant, the scheme is compensated.
  [The effects of the breaches are not serious nor does their cause seem to be poor governance on the part of the trustees, who are reacting appropriately.]
• Failure to put in place a payment schedule for an earmarked scheme where no contributions are payable throughout the relevant accounting period. [The breach has no effect on members' interests.]
• Breaches arising from the trustees' inaction where that inaction is a temporary and practical response to circumstances outside the control of the trustees or their advisers. For example:
  • failing to issue the required information to members about the progress of a wind-up where the trustees will be able to provide more meaningful information to members shortly after the deadline has passed and members have otherwise been kept informed; or
  • trustees not issuing statements of entitlement to members when a scheme starts to wind up when the scheme actuary has advised that it would be unsafe to do so until the scheme's funding level can be reliably confirmed. In this case, trustees are expected to be actively working to resolve outstanding issues, including confirming the scheme's assets and liabilities, and are keeping members informed.
  [Trustees have good reason for temporarily not taking action and the effect is that more relevant and useful information will be issued in due course]

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