Pensions regulator issues second contribution notice

The pair of former employees of insolvent Northern Irish clothes wholesaler/manufacturer Desmond & Sons (D&S) are currently appealing the decision, taken by the regulator’s Determinations Panel (DP) in July.

This is the pensions watchdog’s second attempt to use its contribution notice powers, following the Bonas notice in June, and the first against individuals, rather than a corporate entity – hence the decision not to publicise the decision, pending appeal.

PW further understands the DP, while initially upholding the regulator’s request to seek money from the pair, has insisted the figure sought be cut dramatically from the initial sum demanded.

D&S was declared insolvent in June 2004, at which time its £14m scheme had discontinuance liabilities of nearly £30m. It was forced to close after Marks & Spencer dropped it as a supplier in 2004.

The scheme is unusual in that, because its sponsor did not commence windup until August 2005, it was ineligible for the FAS, while the 2004 insolvency event also rendered it unable to enter the Pension Protection Fund.

Subsequent amendments to legislation allowed it to become part of the FAS, but this process did not begin until January 2009.

Elmer Doonan, pension specialist and partner at global law firm SNR Denton said it made sense “tactically” to pursue individuals, and predicted it could become common in the regulator’s future use of moral hazard powers.

“If, for example, an insolvent employer can’t make the contributions, individuals are the logical next step,” he added.
The regulator told PW it was “unable to comment on individual companies or pension schemes”.