UK Supreme Court overturns ruling in financial support direction case
The UK Supreme Court has overruled the Court of Appeal and held that held that the cost of complying with a Financial Support Direction or Contribution Notice was not to be classed as a ‘provable debt’ but as a ‘liquidation expense’ (or ‘administration expense’).
Under the Pensions Act 2004, a Financial Support Direction (FSD) may be issued by the Pensions Regulator to a company requiring it to give financial support to any defined benefit pension scheme employers to which it is ‘connected’ or ‘associated’ (in accordance with insolvency law provisions), in order to meet shortfalls in the funding of the pension scheme.
The Pensions Regulator may issue an FSD to a company where the scheme employer to which it is connected or associated is either a service company or is insufficiently resourced (as defined under the Pensions Act 2004). The Pensions Regulator may only impose an FSD where it considers it would be reasonable to do so, taking account of such matters as it considers relevant, including…
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