The Pensions Regulator Code of Practice No.12: Circumstances in relation to the material detriment test came into force on 29 June 2009 via The Pensions Act 2004 (Code of Practice) (Material Detriment Test) Appointed Day Order 2009 (SI 2009/1565). The new code sets out where the regulator expects to issue contribution notices on the basis of the 'material detriment test'. TPR considers it is unlikely to affect the majority of sponsoring employers.

Simultaneously TPR published new guidance alongside the code of practice, to assist trustees, advisors and sponsors to manage risk transfers so there is no reduction in member security. "Corporate transactions" is aimed at employers. A new module to the Trustee toolkit, "Buy-ins and partial Buy-outs," has been published to provide guidance to those considering transferring pensions risk to insurers. This includes:

• what is meant by buy-in and partial buy-out
• the differing roles of the employer and the trustee
• the options and schemes' objectives
• data management and administration
• the process of bulk annuity purchase

The background to this lies in amendments made to the Pensions Bill last October (see Aries article) and a draft CoP issued for consultation in December (see Aries article). In May TPR published its report on the consultation, which had attracted 29 responses. A few changes were made to the Code as a result, prior to laying before Parliament; the main ones being

• The addition of the concept of 'replacement' of the employer to the circumstance dealing with the transfer of the sponsoring employer out of the jurisdiction;
• Changing of 'sufficient' to 'significant reduction' in sponsor support in relation to the transfer of liabilities of the scheme; and
• Replacement of the term 'employer' with 'sponsor' support, and its consistent application throughout the code.

Also on 29 June The Pensions Act 2008 (Commencement No. 4) Order 2009 (SI 2009/1566) brought into force provisions in s.126 and Sch 9 of last year's Act, concerning amendments to PA 2004 relating to the material detriment test and contribution notices and financial support directions. This Order also brought section 74 into force on 1 July: this concerns review of certain aspects of the personal accounts scheme established under s.67.

The Pensions Act 2004 (Commencement No.13) Order 2009 (SI 2009/1542) brings into force s.134(2)(d) PA 2004 on 23 June 2009 for regulation making purposes and 21 July 2009 for all other purposes. Section 134(2)(d) allows the Board of the Pension Protection Fund to give a "relevant person" (could be the trustees or managers, or anyone they appoint as scheme administrator) directions regarding the exercise, during an assessment period in relation to an eligible scheme, of that person's powers in respect of prescribed matters. The aim is to ensure that the scheme's protected liabilities do not exceed its assets, or if they do, that the excess is kept to a minimum.

Related to this, The Pension Protection Fund (Entry Rules) (Amendment) Regulations 2009 (SI 2009/1552) prescribe the relevant person's powers in respect of amending the scheme's rules as a matter for the purposes of s.134(2). This means the Board of the PPF can direct trustees to amend scheme rules (or stop them doing so), if necessary to protect the assets during an assessment period. This comes into force on 21 July 2009.

The Pensions Act 2004 (Commencement No.6, Transitional Provisions and Savings) (Amendment) Order 2009 (SI 2009/1583) amends SI 2005/1720 by omitting Art 4 para 8, with effect from 26 June 2009. This will allow the Board of the PPF to make, in eligible cases, fraud compensation payments under ss. 83 and 84 PA 1995 (and corresponding legislation in Northern Ireland) to trustees of eligible pension Schemes, notwithstanding that an application under section 82 of that Act (or that corresponding legislation) - in a case where the sponsoring employer became insolvent before 6 April 2005 - was made after 6th April 2006. This is designed to extend the transitional provisions whereunder the PPF took over the functions of the Pensions Compensation Board under the pre-1 September 2005 legislation in PA 1995.

Meanwhile the final draft of The Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2009 has been laid before Parliament. This follows a consultation last February (see Aries article), which attracted 148 responses. On 9 June the DWP published its own response, explaining why, as is normal, very few changes have been made to the consultation draft in the final regs. The Regs will transfer responsibility for running the FAS to the Board of the PPF. They also clarify that NRA for FAS purposes is the age specified in the scheme rules at the point the member ceased to accrue benefits in the scheme as the age at which that member would normally retire. This is the third and final set of Regs implementing the Government's December 2007 commitment to extend the scope of FAS assistance and make use of all available residual assets in order to help fund the enhanced assistance payments.

Update 15 July 2009
The final regs have been published today as SI 2009/1851, made on 9 July 2009 and in force from the following day.