Nicola Parish from the Pensions Regulator reminds defined benefit trustees of their duty to submit scheme valuations on time, and points to the emerging precedent of substantial fines for those who fail to comply.
So a late valuation (the vast majority of schemes have 15 months to submit them) can cause us concern about the state of a scheme and the commitment of its sponsoring employer.
In April 2017, as part of our new clearer, quicker and tougher approach, we began a review of our procedures for late valuations.
We are monitoring valuation due dates and will take action sooner to put things right where breaches occur
During this transition period we prioritised cases with significant delays and took a more hands on and interventionist approach to resolve them.
Regulator’s approach is changing
One of our targets during 2017/18 was to ensure that in cases of late valuations, 95 per cent or more were either received or we took steps to use our powers within 12 months. We met this target.
Since spring 2017 we have issued nine Warning Notices for late valuations.
In response to us taking this action, two schemes complied and submitted valuations. Five complied after being issued with Improvement Notices (to the trustee) and Third Party Notices (to the employer), requiring steps be taken and valuations to be submitted by a specific date or face a fine.
One case remains ongoing and one case has resulted in a substantial fine.
Fines will be issued
The trustee of Rentokil Initial Pension Trustee Limited was fined £25,000. This fine was imposed because they failed to complete the 2012 and 2015 valuations for the Initial Hospital Service Limited No.1 Pension Scheme by their respective deadlines, July 2013 and July 2016.
To secure completion of the valuations we also issued an Improvement Notice to the trustee and a Third Party Notice to the employer.
Following imposition of the penalty and issue of the Improvement and Third Party Notices, we received both outstanding valuations.
If they miss the deadline for submitting a valuation, trustees are obliged to submit a Breach of Law notification to us. This notification confirms the reasons why the valuation deadline has been missed and what steps the trustee is taking to resolve the matter. We will remain in contact with the trustee to ensure progress is made to finalise a valuation and will take action if it is not.
Most schemes correct errors
The majority of late valuations are received within two months of a trustee submitting a Breach of Law notification.
Rentokil blames internal administration for £25k fine
Business services group Rentokil Initial has blamed its internal pensions administration for failures involving the Initial Hospital Service Limited No.1 Pension Scheme, which led to a £25,000 fine from the Pensions Regulator.
However, if a revised timetable is not met, or timescales to submit a valuation are further extended without good reason, we will take action to impose a deadline on the trustee and/or the employer through issue of an Improvement Notice or Third Party Notice.
Failure to comply with these notices may result in the imposition of a penalty.
We are monitoring valuation due dates and will take action sooner to put things right where breaches occur. We will also consider taking action if we find that breaches have not been reported to us within a reasonable timeframe.
is executive director of frontline regulation at the Pensions Regulator
