Trustee Guidance: Receipt of the Section 120 Notice
Confirmation of an Assessment Period
The insolvency practitioner or official receiver must notify the Board of the Pension Protection Fund, the trustees, and the Pensions Regulator of an insolvency event where the company is a sponsoring employer of an occupational pension scheme using a section 120 notice within 14 days of the later of:
- the insolvency event; or
- the day they become aware that a occupational pension scheme exists.
Further detailed information for Insolvency Practitioners is available in Guidance for Insolvency Practitioners and Official Receivers.
On receipt of a section 120 notice the Pension Protection Fund must confirm whether there has been a qualifying insolvency event and whether an assessment period has begun. To minimise the uncertainty scheme members may face, the Pension Protection Fund has 28 days in which to confirm whether there is an assessment period in relation to the scheme once all the necessary information has been received from trustees and others.
As soon as the Pension Protection Fund receives a section 120 notice a member of the assessment team is assigned as a caseworker. The caseworker will liaise directly with the trustees of the scheme to gather information about the scheme.
The caseworker may contact the scheme advisers or insolvency practitioner for assistance where there are difficulties tracing trustees or the trustees are unable to provide the necessary support to enable the Pension Protection Fund to confirm whether or not the scheme is in an assessment period.
Where more than one employer is or has been involved with the scheme the situation is more complicated and further considerations apply, further information is available here.
Objectives
The key objective of this period is to determine, within 28 days of receiving the section 120 notice, whether the scheme is in an assessment period, namely the following criteria have been met:
Key Activities for Trustees
Provide the information requested by the caseworker.
A list of standard information needed is attached, however your caseworker will be able to provide further guidance about which information is the highest priority depending on the particular circumstances of the scheme.
Issue a communication to scheme members explaining that the Board is considering whether the scheme is in an assessment period and how that would affect scheme member’s benefits.
Some Questions and Answers on the compensation provisions and the impact on scheme members’ benefits during the assessment period are attached. You will need to tailor the Questions and Answers to your scheme. Whether or not you use this material to assist when drafting a communication, the Pension Protection Fund asks that you provide a draft of the communication you intend to issue for your caseworker to comment on.
Familiarise yourself with the role of trustees during the assessment period.
Key Activities for the Pension Protection Fund
Gather information on whether there has been a qualifying insolvency event in relation to an eligible scheme
Issue a notice confirming whether there has been a qualifying insolvency event in relation to an eligible scheme and whether an assessment period has commenced
Where the scheme is in an assessment period:
Make contact and begin to build a relationship with the trustees
Address any queries the trustees raise
Take on role of creditor
Where the scheme is not in an assessment period:
Reject the section 120 notice and cease to be involved in the scheme
Back to top
Created May 2006
|
