The Pensions Regulator

Telent pension scheme undertaking received

Ref: PN08-08
11 April 2008

An undertaking from Pension Corporation has been received by the Pensions Regulator covering a key aspect of the governance of the Telent pension scheme, as well as other schemes in which Pension Corporation has an interest.

The trustees and Telent have also agreed a number of additional measures designed to protect members' interests and safeguard the future governance of the scheme.

The undertaking and associated governance documentation address the regulator's concerns which led to the appointment of three independent trustees with exclusive powers to the scheme in October last year. The new structure will govern the scheme after the expiry of the trustee appointment on 18 April.

The regulator has today published a report, under Section 89 of the Pensions Act, outlining the background to its involvement in this matter, the issues that have arisen, and how these issues will be addressed in the future.

Editor's notes

1. The report is published on the Pensions Regulator's website. Section 89 of the Pensions Act states that the Pensions Regulator may publish a report of the consideration given by it to the exercise of its functions in relation to a case and the results of that consideration if it considers it appropriate to do so.
2. On 25 September 2007, Co-Investment No.5 LP Incorporated (CILP), whose general partner is advised by Pension Corporation, announced an offer of 600p per share for Telent. This offer was declared wholly unconditional on 15 November 2007. CILP is a special purpose vehicle of Pension Corporation.
3. The Chairman of the Trustee Board of the GEC 1972 Plan (the Telent pension scheme) wrote to the Pensions Regulator on 18 October 2007 expressing a number of concerns and asking the regulator to use its powers to appoint an independent trustee.  On 19 October, the Pensions Regulator Determinations Panel appointed three Independent Trustees to the scheme with exclusive powers. This appointment was upheld at a contested hearing before the Determinations Panel on 7 November 2007.
4. The Pensions Regulator Determinations Panel is the decision making body of the regulator. Where the regulator wishes to exercise its powers it is required to provide a submission to the panel. A decision is made by the panel as to whether the use of the power is appropriate and a determination notice is used setting out the reasons for the decision. Our website provides more information on the panel and the determinations process.
5. The Pensions Regulator is the regulator of work-based pension schemes in the UK, with objectives to protect members' benefits, promote good administration and reduce the risk of calls on the Pension Protection Fund. Our approach is risk-based focusing on education and enablement, with enforcement where appropriate. We have the ability to:

• collect information about pension schemes; through scheme returns, under the scheme funding regime and as well as statutory (including whistleblowing) reports;
• issue notices requiring actions to tackle non-compliance, prohibit trustees who are judged not fit and proper to carry out their duties or appoint independent trustees;
• direct pension schemes as to how to calculate their liabilities and the contributions required;
• issue a contribution notice where there is a deliberate attempt to avoid liabilities, or a financial support direction where the employer is a service company or insufficiently resourced.