Section 182: Cases where fraud compensation payments can be made
659.This section deals with the payment of fraud compensation to occupational pension schemes. It is necessary to make an application for fraud compensation and the requirements to be met by the application will be set out in regulations. Regulations can specify particular schemes and descriptions of schemes which are not entitled to make fraud compensation applications.
660.Compensation will be paid if the value of the assets has been reduced since the ‘relevant date’ and the Board considers that there are reasonable grounds for believing the reduction was attributable to an act or omission constituting an offence prescribed by regulations for the purposes of this section. The relevant date in the case of schemes established under trust is the 6 April 1997 and in other cases a date to be specified by the Secretary of State by order.
661.Compensation will be payable if subsections (2), (3) or (4) apply.
662.Subsection (2) applies where there is a qualifying insolvency event, a binding scheme failure notice (issued under section 122(2)(a)) where a scheme rescue is not possible) and a cessation event has not occurred and is not a possibility in relation to the period set out in paragraph (c). (A cessation event is defined in subsection (9)).
663.Subsection (3) applies where there has been an application or notification under section 129 in respect of an eligible scheme that has not had an insolvency event but where the employer is unlikely to continue as a going concern, and the Board has issued a scheme failure notice, which has become binding.
664.Subsection (4) applies where a scheme is not an eligible scheme for the purposes of Chapter 3 of Part 2 (e.g. where it is a money purchase scheme). An application for fraud compensation can be made to the Board on the basis that the employer is unlikely to continue as a going concern and other requirements are satisfied (these will be set out in regulations). This section will give entitlement to fraud compensation if in response to such an application the Board issues a scheme failure notice under section 183(2) confirming that a scheme rescue is not possible. This notice must become binding.
665.Subsection (6) sets out requirements in relation to the “authorised period” – this is the period during which an application for fraud compensation can be made. An application must be made within twelve months of:
in a case within subsection (2) where the scheme is an eligible scheme (under section 126) the qualifying insolvency event; or
in a case within subsection (2) where the scheme is not an eligible scheme, the issue of a scheme failure notice under section 122(2)(a); or
in a case within subsection (3) the application or notification to the Board under section 129; or
in a case within subsection (4), the time it becomes clear that the employer in relation to a scheme, will not continue as a going concern;
the time when the scheme’s auditor, actuary, trustees or managers first became aware of the fraud event, if this is later.
666.The Board may extend this period if it considers this appropriate. An application cannot be made once the Board has assumed responsibility for the scheme under Chapter 3 of Part 2..
