The Pensions Regulator's publications on clearance (the voluntary process to obtain assurance from the regulator that it will not use its powers in relation to transactions that affect a pension scheme) and abandonment have been slightly amended, so that they are in line with amendments in the Pensions Act 2008. These concern the issue of contribution notices and financial support directions in circumstances where a bulk transfer has been made on or after 14 April 2008, and came into force upon Royal Assent on 26 November 2008.

(Other changes in the Act to the moral hazard rules, on which TPR consulted in April 2008 (see Aries article) - notably the new "material detriment" test and the associated statutory defence, have not yet been commenced, so the guidance does not yet cover these.)

The previous version of the clearance guidance, issued on 20 March 2008, followed a consultation on which TPR reported at that time. This is no longer on the TPR site (only the 2005 version remains in the archive), although the original abandonment guidance, dating back to May 2007, is still available at the time of writing.

The latest changes can be summarised as:

Abandonment

One instance of removal of the 'otherwise than in good faith' reference (para 76).

Clearance

Amendments to Appendices B and C to reflect the following amendments to TPR's powers:

• additional factors for TPR to consider where relevant when deciding whether a contribution notice would be reasonable;
• an additional mandatory requirement for TPR to consider the reasonableness of a party's actions in the circumstances when deciding whether a contribution notice would be reasonable;
• the removal of 'otherwise than in good faith' from the second ground for contribution notices;
• the clarification that a series of acts and failures can be considered for a contribution notice;
• contribution notices and financial support directions can require support for other schemes that members have transferred to;
• the insufficiently resourced test for financial support directions can also take into account aggregate resources of associated persons; and
• the date when changes take effect.

There are no changes to the clearance process itself. The level of clearance activity has been on a downward trend due to increasing industry understanding of TPR's requirements and a decline in merger and acquisition activity. This trend is likely to accelerate as employers become more wary of the cost of applying for clearance, which including advisers' bills can run to several hundred thousand pounds. Since the process was introduced in April 2005, 444 clearance statements have been issued, and only 3 refused.

These figures come from another recent publication by TPR on Scheme Funding. This report outlines the regulator's findings in relation to scheme funding where recovery plans have been put in place, updating last year's similar report.

While the recovery plan data shows positive steps being made to address deficits, the recovery plans were for the most part set in economically benign circumstances. Economic factors affecting recovery plans received over the next year will be very different. During this time TPR expects to see:

• trustees keeping the employer covenant, and existing recovery plan, under review;
• continued primacy given to the selection of adequately strong technical provisions, relative to the employer covenant;
• recognition that there should be less weight put on FRS17 as a measure, given that higher corporate bond yields have led it to diverge from other measures; and
• where there are short-term concerns over affordability, a back-end loaded plan may be more appropriate for member security than extending plan length. However, where a new valuation shows a much larger deficit, a longer recovery plan might be appropriate.

Record Keeping

TPR today published final guidance on record keeping, following a consultation last summer (see Aries article), together with a report on the consultation. Because the principles of good record-keeping apply to all work-based schemes, TPR consulted with the FSA in preparing this guidance as it applies to contract-based schemes.

The guidance helps those responsible for record-keeping and administration to put in place good practices for measuring the presence of member data. It also gives advice on assessing the risks of incomplete or inaccurate data. Emphasising that simply measuring the presence or absence of data does not provide any evidence that the data is accurate, TPR says ominously that this year it will review progress in addressing the problems identified in the consultation, to see whether further action is required. Trustees and providers need to reassure themselves as to the accuracy of their data, as well as checking and improving the existence of data.

The final guidance now uses 'common' and 'conditional' data, as these more closely reflect the differences in scheme types. The eleven items of 'common data' are those necessary and applicable to all members of all schemes, in order to uniquely identify a member. TPR considers the absence of one or more of these items, or an error in any of them, is highly likely to mean that the member cannot be identified or traced, or the member's benefits be correctly established with any degree of certainty. The precise nature of 'conditional data' is dependent on scheme type, structure and system design. The list of examples is much more extensive.

TPR distinguishes in addition 'numerical' data, such as the numbers of pensioners (by type, ie member, dependant, etc), actives with part-time service history, and members with pension sharing orders.