Commentary on Sections Payments by employers Section 268: Payments made by employers to personal pension schemes
1040.This section amends section 111A of the Pension Schemes Act 1993 (monitoring of employers’ payments to personal pension schemes) by inserting new subsections (3) to (7A). These require the trustees or managers of a scheme to monitor the payment of contributions by the employer under the direct payment arrangements. These are defined by section 111A(2) of that Act as arrangements under which contributions are paid by employers on behalf of the employee or by the employer on his own account. In order to carry out this obligation, the trustees and managers can request the employer provide them with information on payments. The employer must then comply with this request within a reasonable period. If an employer does not comply with the request for payment information the trustees or managers must within a reasonable period give notice of this to the Regulator.
1041.New subsection (7A) of section 111A of that Act requires trustees or managers to give the Regulator a notice. This will be required where a contribution under the direct payment arrangements has not been paid by its due date, and the trustees or managers have reasonable cause to believe that the failure is likely to be of material significance to the Regulator in the exercise of any of its functions. The notice must be given to the Regulator and the employee within a reasonable period after the due date. Under section 90, the Regulator must issue a code of practice on the meaning of ‘material significance’ in relation to the exercise of its functions, and on the meaning of ‘reasonable period’.
1042.Subsection (3) amends section 111A(8) of that Act so that a civil penalty under section 10 of the Pensions Act 1995 (civil penalties) may apply where the employer does not take all reasonable steps to comply with the trustees or managers request for payment information and as a result they were not able to comply with their duty to monitor payment of contributions.
1043.A civil penalty under section 10 of the Pensions Act 1995 (civil penalties) may also be imposed on an employer where a contribution payable is not paid by its due date.
1044.Subsection (4) amends section 111A(9) of that Act so that it refers to new subsections (7) and (7A) rather than old subsection (6) and (7). Under subsection 111A(9) a civil penalty may be imposed on trustees or managers who fail to take all reasonable steps to comply with the requirement to give the Regulator notice as required.