NOW: Pensions Trust: Determination notice

Determination Notice under section 10 of the Pensions Act 1995.

In relation to NOW: Pensions Trust

The Pensions Regulator case ref: C194522328

1. Members of the Determinations Panel (“Case Panel”) of the Pensions Regulator (“TPR”) held a Determination Meeting on 17 October 2024 to consider the issues in two Warning Notices dated 3 August 2023 addressed to NOW: Pensions Limited (“NPL”) and NOW: Pension Trustee Limited (“NPTL”) respectively.
2. NPTL is the sole trustee of the NOW: Pensions Trust, which has been an authorised Master Trust pension scheme since 23 September 2019 (“the Scheme”). NPL is the scheme strategist and scheme funder of the Scheme and has power to vary the terms of the trust under which the Scheme was established. By reason of their respective roles in relation to the Scheme, each of NPL and NPTL are under statutory obligations to notify TPR of certain matters and events relating to the Scheme. This case concerns serious and repeated failures to comply with those obligations.
3. The Warning Notices were referred to the Determinations Panel by a TPR case team (“Case Team”) on 30 August 2024, following the receipt of Representations from both NPL and NPTL, a single Response to both sets of Representations by the Case Team, and a single Reply on behalf of both NPL and NPTL.
   
    

Matters to be determined

4. Each Warning Notice asked the Determinations Panel to determine whether to issue a notice requiring NPL or NPTL (as the case may be) to pay a penalty of £50,000 under section 10 of the Pensions Act 1995 (“PA 95”).
5. The grounds upon which a penalty of £50,000 was sought against each of NPL and NPTL were that each of them had failed to give notice to TPR of three tranches of communication failures comprising a “significant event”, within the meaning of that term in section16 of the Pension Schemes Act 2017 (“PSA 17”) and that as a result section 10 of PA 95 applied to them and gave the Case Panel jurisdiction to require each of them to pay a penalty. Alternatively, the Warning Notices argued that NPL and NPTL had failed to give notice to TPR of these failures as a breach of the law, contrary to section 70 of the Pensions Act 2004 (“PA 04”). As a result, the Warning Notices argued that section 10 of PA 95 applied to Page 2 NPL and NPTL and gave the Case Panel jurisdiction to require each of them to pay a penalty.
6. In its Response, the Case Team altered its case to seek a single penalty of £50,000 against each of NPL and NPTL in respect of five breaches arising from these failures (three breaches of section 16 of PSA 17 and two breaches of section 70 of PA 04).
7. The power to issue a notice requiring a person to pay a penalty under section 10 of PA 95 is a reserved regulatory function and is therefore only exercisable by the Determinations Panel. In this case the Case Panel decided to invite NPL, NPTL and the Case Team to attend the Determination Meeting, following NPL’s and NPTL’s requests to do so.
8. However, on 9 October 2024 those requests were withdrawn in circumstances where the Case Team and NPL and NPTL had reached agreement on almost all of the issues raised by the Warning Notices and had submitted an Agreed Statement of Issues to the Case Panel. In that document NPL and NPTL:
   (a) agreed that they had each breached their obligation under section 16(1) PSA 17 on three occasions and that as a result section 10 of PA 95 applied to them and gave the Case Panel jurisdiction to require each of them to pay a penalty;
   (b) agreed that they had each breached their obligation under section 70(2) on two occasions and that as a result section 10 of PA 95 applied to them and gave the Case Panel jurisdiction to require each of them to pay a penalty;
   (c) agreed that a “single separate penalty” should be imposed on each of them, with the penalty taking into account (among other things) each of the five breaches identified above; and
   (d) disputed the position of the Case Team that a penalty of £50,000 should be imposed on each of NPL and NPTL and instead set out a statement of mitigating factors in order to reduce the penalty from that amount.
9. In the Agreed Statement of Issues NPL and NPTL also withdrew their requests to attend the Determination Meeting. In those circumstances the Case Team withdrew its request to attend also. The Case Panel accordingly decided to hold the Determination Meeting without the parties in attendance.

The Case Panel’s decision

10. The Case Panel made two determinations as set out below, but has set out both determinations in this single Determination Notice for convenience:
    1. A determination to issue a penalty notice to NPL in the sum of £50,000.
    2. A determination to issue a penalty notice to NPTL in the sum of £50,000.
11. This Notice also gives the Case Panel’s reasons for its two determinations.

Directly Affected Parties

12. Section 96(2)(d) of PA 04 requires the giving of notice of a determination to “such persons as appear to the Regulator to be directly affected by it”.
13. The Case Panel considered NPL to be the only person directly affected by its determination to issue a penalty notice to it. The Case Panel considered NPTL to be the only person directly affected by its determination to issue a penalty notice to it. Neither the Warning Notice nor any representations from NPL or NPTL suggested that any other person would be directly affected by the Case Panel’s determinations.

Next Steps

14. A penalty notice will not be issued to NPL until at least 28 days after the date of this Determination Notice, in case a reference is made of it by NPL to the Upper Tribunal.
15. A penalty notice will not be issued to NPTL until at least 28 days after the date of this Determination Notice, in case a reference is made of it by NPTL to the Upper Tribunal.
16. If a penalty notice is issued, the penalty is payable no more than 28 days from the date of the penalty notice (in accordance with Regulation 21 of the Occupational Pensions Regulatory Authority (Determinations and Review Procedure) Regulations (SI 1997/794)).
17. Appendix 1 to this Notice contains details of the right of referral to the Upper Tribunal.

The Scheme

18. The Scheme is an authorised master trust. The Warning Notices report that as of 31 March 2022 the Scheme had 1,894,476 members (802,892 active and 1,091,584 deferred). NPL and NPTL did not dispute these figures. These members were employed by many different employers, who entered participation agreements in order to allow their employees to join the Scheme. As at 16 June 2017 the Scheme had 26,345 employers.
19. NPTL is the sole trustee of the Scheme. Between 2019 and 2022 the board of NPTL comprised at least four individuals and a professional trustee company, Dalriada Trustees Limited.
20. NPL describes itself in its Representations as the scheme strategist, scheme funder, scheme founder and Trust Manager in relation to the Scheme.

Duties to report matters to TPR

21. In order to understand the factual background that follows it is necessary to introduce at this stage the two obligations to report matters to TPR that are engaged in this case.
22. The first reporting obligation arises under section 16(1) of PSA 17, which provides:
    “Where a person mentioned in subsection (2) becomes aware of the fact that a significant event has occurred in relation to an authorised Master Trust scheme, the person must give notice of that fact, in writing, to the Pensions Regulator as soon as reasonably practicable”.
23. This obligation applies to NPTL, as trustee of the Scheme, and to NPL, as a scheme funder and scheme strategist in respect of the Scheme. Those roles are both “mentioned” in section 16(2) PSA 17.
24. The meaning of “significant event” in section 16(1) of PSA 17 is given by regulation 14 of the Occupational Pension Schemes (Master Trusts) Regulations 2018 (S.I. 2018/1030) (“the Master Trusts Regulations”). That regulation lists 12 “significant events”, of which the one that is relevant to this case is the following: “a failure of the systems or processes used in running the scheme which has a significant adverse effect on the security or quality of data or on service delivery”.
25. The second reporting obligation arises under section 70(2) of PA 04. It also applies to persons including the trustee of an occupational pension scheme and the scheme strategist and scheme funder of a Master Trust scheme. Section 70(2) of PA 04 provides:
    “Where the person has reasonable cause to believe that – 
    (a) A duty which is relevant to the administration of the scheme in question, and is imposed by or by virtue of an enactment or rule of law, has not been or is not being complied with, and
    (b) The failure to comply is likely to be of material significance to the Regulator in the exercise of any of its functions, he must give a written report of the matter to the Regulator as soon as reasonably practicable”.
26. The obligation under section 16 PSA 17 is sometimes described as the obligation to report “significant events”. The obligation under section 70(2) PA 04 is sometimes described as the obligation to report breaches of law.

Current Position

27. As noted in paragraph 8 above, NPL and NPTL now accept that they breached their reporting obligation under section 16 PSA 17 in relation to three occasions when NPL discovered that certain communications that the automatic enrolment legislation required to be sent to workers and jobholders regarding the Scheme had not been sent. NPL and NPTL also accept that they breached their reporting obligation under section 70(2) PA 04 in relation to two of those occasions. The total number of such communications that were not sent is 81,619.
28. For the reasons that follow the Case Panel agrees that these failures to make statutory communications ought to have been reported to TPR. They involve a very large number of important statutory notices that ought to have been sent to scheme members and potential members to inform them of their rights under the auto enrolment legislation. The evidence available to the Case Panel shows that NPL and NPTL did not fully appreciate the severity of the impact of these failures, and that the actions they took in response to the failures were inadequate.
29. The remainder of this Notice sets out the factual background to those breaches of reporting obligations, before turning to the law and the parties’ respective arguments. The Case Team and NPL and NPTL have reached agreement in relation to all of the legal tests that must be satisfied before TPR can issue a penalty under section 10 of PA 95. The Agreed Statement of Issues shows that the only matter remaining in dispute between the parties is the level of penalty that should be imposed on (i) NPL and (ii) NPTL. 

Factual Background

30. The parties have helpfully produced an agreed Chronology. Much of the following is drawn from that Chronology, supplemented by evidence from the Warning Notices and Representations, and documents referred to in those documents.

Background to the Communication Failures

31. The Scheme was established on 29 November 2011. It was and is an automatic enrolment occupational pension scheme.
32. The Warning Notices in this case attached documents showing problems with the running of the Scheme from late 2016:
    (a) On 1 December 2016 TPR issued a Warning Notice to NPTL seeking an order that a skilled person’s report should be obtained under section 71(1) of PA 04 on “specified matters relating to problems the Scheme is experiencing collecting contributions from participating employers”. 
    (b) On 7 February 2017 a case panel of the Determinations Panel determined that such a report should be obtained and on 8 March 2017 that case panel issued a notice under section 71(1) of PA 04 requiring NPTL to obtain such a report into the then contribution backlog, the ability of employers to pay contributions going forwards, and the detriment suffered by members as a result of contributions being unpaid and uninvested. The costs of the report were to be met by NPTL.
    (c) On 19 October 2017 TPR determined to issue an Improvement Notice to NPTL and a Third Party Notice to NPL, also in relation to unpaid employer contributions. On the same date TPR also issued a penalty notice in the amount of £50,000 to NPTL under regulation 28(1)(b)(iii) of the Occupational Pension Schemes (Charges and Governance) Regulations 2015 due to its failure to secure that core financial transactions were processed promptly and accurately. It may be noted that NPTL applied for a review of this penalty, asserting (among other things) that it was moving to a new software platform called Gateway because its previous one (Staffcare) had struggled to cope with the number of new enrolling employers.
    (d) On 25 January 2018, a case panel of the Determinations Panel determined to issue a penalty notice to NPTL in the amount of £20,000 as a result of its failure to report to members of the Scheme that there had been materially late payments by their employers into the Scheme.

First Category of Communication Failures: Bounce-backs

33. The Agreed Chronology records that on 26 February 2018 “Email communications sent through Gateway fail to be delivered due to invalid or missing email addresses”. The evidence shows that on that date 10 separate employee communications failed to send due to “Missing delivery address”.
34. In April 2019 NPL discovered that an email mailbox with address “noreply- ngw@nowgateway.com” had received messages including messages from members and emails that had bounced back when NPL had attempted to send emails to what turned out to be invalid email addresses. 
35. NPL responded to this discovery by engaging a team of temporary staff in September 2019 to clear the mailbox and seek valid email addresses where emails had bounced back.
36. Further, in October / November 2019, NPL sought to obtain valid “Common Mailbox” addresses from employers that had not yet provided them. These are generic email addresses for each employer that are used by NPL to send enrolment communications to a Participating Employer’s employees, if no valid email address has been provided for the employees themselves.
37. At the same time as these steps, NPTL was applying for the Scheme to be authorised as a master trust. This application was made on 7 May 2019 and granted on 23 September 2019. TPR’s letter granting authorisation stated that the Determinations Panel was satisfied that the Scheme had adequately demonstrated that the five criteria for authorisation under section 5 of the PSA 17 were met, including “the systems and processes used in running the scheme are sufficient to ensure that it is run effectively”. The letter continued “Meeting the five criteria under section 5(3) of the Act is an ongoing requirement and NOW: Pensions Trust is expected to continue to meet all the five criteria following authorisation” (emphasis in original).
38. In September 2019 NPL was acquired by Cardano.
39. On 28 April 2020 NPL identified that the process to re-send emails that had “bounced back” to the no-reply email inbox described above was some four months behind schedule. This caused an NPL Client Support Manager to complete an “Incident Reporting Form” and report the incident within NPL two days later. The Form included a question: “The incident involves an act of breaking or failing to observe a law, agreement, code of conduct?”, which was answered in the affirmative. The question of whether the incident involved a significant event under section 16 PSA 17 was answered in the negative.
40. The form did not state how many members were affected. NPL’s Head of Compliance asked this by email of 19 May 2020, including asking how many members “did not receive AE statutory communications”. An answer was chased on 15 July 2020, although NPL’s Representations report that by 19 June 2020 it was apparent that 30,989 failed communications remained outstanding, across at least 2,416 employers.
41. The discovery of this backlog is described by the parties in this matter as the “2020 Incident”. It is common ground in the Statement of Agreed Issues that the “2020 Incident” ought to have been reported by NPL and NPTL to TPR under section 16 PSA 17 and under section 70(2) PA 04. It is also common ground in that Statement that no such reports were ever made.
42. The Case Panel sees the “2020 Incident” in a wider context and as a systems failure which includes the failure from at least 26 February 2018 to send communications through the Gateway system due to invalid or missing email addresses (whether it was the addresses for employees or employers that were invalid or missing). That originating failure was then compounded by the failure to monitor a “no reply” mailbox that could in fact receive replies including bounce-backs, and did not inform senders of emails to it that the mailbox was not monitored. Only in April 2019 did NPL discover that emails had failed to be delivered, and only in September 2019 did NPL engage a team to undertake remediation of re-sending the emails. The backlog in that remediation process that was discovered in April 2020 is just one in a line of linked failures from February 2018 onwards, to ensure that statutory notices were delivered to employees and others by the Gateway system.
43. NPL reported on the backlog in a Risk Management document of 1 June 2020. This described the root cause as “poorly documented process with insufficient oversight meaning that GWNR [i.e. Gateway No Reply] cases were not being processed and were not included in MI Reporting. As a result, these cases have built into a backlog”.
44. On 31 July 2020 NPTL’s Operations and Membership Committee met and considered, among other things, this backlog. It was reported that “the backlog was being addressed”.
45. On 14 October 2020 NPL’s Head of Compliance sent an internal email with advice on the “regulatory requirement” for the communications that had not been sent and the implications of the delay in employees receiving them. This email noted the total number of emails that had bounced back was around 35,000, and that three groups of them contained notices that were required to be given by statute:
    (a) Assessment notices – these inform certain employees that they have a right to join the Scheme.
    (b) Enrolment notices – these inform other employees that they have been enrolled in the Scheme but have a right to opt out.
    (c) Postponement notices – these inform jobholders that their assessment has been postponed but that they have a right to join the Scheme in the meantime.
46. This email of 14 October 2020 advised that the failures to give these notices was a breach of the auto enrolment regulations. It then noted that “there does not appear to be any penalties attached to non-compliance in these scenarios” and advised that there was no need to notify TPR of this breach of the law. This was because “on the basis that this issue was caused by incorrect information supplied by employer and / or employee, the effect of the breach is not significant in that members are not aware of rights to join scheme, but will be made aware and I assume, could have their entrance to the scheme backdated if they wished to do so as part of the rectification and there are no wider implications resulted from the breach”.
47. On 28 October 2020 an Operations and Membership Committee meeting of NPTL took place. This noted that 15,500 of the c. 35,000 failed emails remained unresolved and that 9,500 of these were communications required by statute.
48. The issue of these failed emails and the slow progress of remediation of them was discussed at NPTL’s Operations and Membership Committee meetings in November and December 2020 and in January and February 2021. In readiness for the meeting of this committee on 24 February 2021 NPL’s Head of Compliance produced a paper to set out the rationale for not reporting this issue to TPR. This paper, like the earlier email of advice dated 14 October 2020, considered the obligation to report breaches of law (section 70 of PA 04) but not the separate obligation to report “significant events” (section 16 PSA 17). The paper concluded that while non-delivery of some statutory notices was a breach of law, no report to TPR was needed. This was because the breach was not “likely to be of material significance” to TPR, because neither members’ benefits nor their rights were affected by the breach. Further, (i) the original error stemmed from incorrect information from employers / staff and did not have wider implications for the scheme, and (ii) “even if we reported the matter to the Regulator had no powers [sic] to take action against us in relation to the breach”.
49. This advice was reported to the Operations and Membership Committee of NPTL on 24 February 2021. The committee agreed not to report this to TPR, subject to receiving further information on remediation. This further information was given the following day, and no report to TPR was then made.

Second Category of Communication Failures: Missing email addresses in Gateway X

50. Three months later, NPL began to discover evidence of more statutory communications that had failed to be sent to members or potential members of the Scheme. The Agreed Chronology records that on 20 May 2021 NPL identified an “unusual system status code”. On further investigation it became apparent that there might be a problem with statutory communications being sent to one employee due to a missing employee email address or Common Mailbox address.
51. By 1 June 2021 NPL had identified that there were 86 employers without a Common Mailbox address on the version of Gateway that was then in use (called “Gateway X”), and that at least 102 communications that were required by statute had failed to be sent.
52. The NPL employee who discovered this incident completed an Incident Reporting Form on 16 June 2021. This stated that the incident involved a breach of law, but did not involve a significant event under section 16 PSA 2017. The form describes the incident being discovered as part of  “business as usual” work with failed communications sent out of the Gateway system. This particular category of failed communications was caused by Gateway not holding an employee email address or a Common Mailbox address for the employee’s employer. In such circumstances the communication cannot be sent but, it appears, no error message alerted NPL or NPTL to the failure. The Incident Reporting Form records that no Common Mailbox address was held for 87 employers, so that for each of these there was a risk of communications failures to their employees. The form concluded “this is ultimately a failure of Gateway as a system”.
53. By 2 July 2021 NPL had identified that this category of communication failures involved c. 29,000 statutory communications which had not been sent, dating back to 2018 and with the majority preceding 2020 (1,986 occurred in 2019, 480 occurred in 2020 and 77 in 2021). The cause was described as a lack of a Common Mailbox address for employers.
54. The parties described the discovery of these failed communications as the “2021 Gateway X Issue”. As with the first category of communication failures described above, the Case Panel saw this issue in its wider context and as a systems failure. The issue does not relate only to 2021 but appears to be a consistent failure from 2018 caused by a lack of Common Mailbox and employee email addresses, coupled with the lack of an error message when communications were not sent. Seen from the perspective of employees and savers, this issue would have appeared the same as the first category of communication failures: both resulted in the non-receipt of statutory notices to which they were entitled, and which gave them important information about their auto-enrolment choices. Those choices could have long-lasting consequences and were intended to be exercised within limited time periods.
55. On 21 July 2021 NPL’s Head of Compliance gave advice by email that this second category of communication failures was a breach of law, but not a significant event. The email stated that NPL would be entitled to wait until it had done further investigations before issuing a breach of law report to TPR. The email concluded that there was no significant event because this and the first category of communication failures did not form “a pattern of repeated communication failures”. That phrase is used in TPR’s published guidance on the obligation to report significant events, as an example of a significant event. The email concluded that because the first category of communication failures concerned communications that were issued late, while the second category concerned communications that were not issued at all, there was not a “pattern of repeated communication failures”.
56. As noted above, NPL and NPTL now accept that the second category of communication failures was a significant event and should have been reported to TPR as soon as reasonably practicable.
57. On 22 July 2021 NPTL resolved to take external legal advice on whether the second category of communication failures was a significant event. This was received in late July and early August 2021. NPL and NPTL have asserted privilege in that advice, as they are entitled to do, and the Case Panel is not aware of its contents or whether NPL or NPTL acted in accordance with it.
58. In late July 2021 two members of NPTL’s board expressed concern at the approach being taken to this issue. One, representing Dalriada Trustees, was concerned at the delay in reporting the breach of law. Another considered that there was no “downside” to consulting with NPL’s TPR supervisor on the question of whether the second category of communication failures was a significant event. She described this as “the cautious approach”.
59. NPTL’s Operations Committee met on 25 August 2021. NPL’s Head of Compliance prepared a paper for this meeting that described this second category of communication failures as “caused by a system design error” that had been present “since Gateway X’s inception in 2018”. The scale of the issue was large: approximately 23,000 members had not received some form of statutory communication from 2018 to date. The paper made proposals to rectify the failures. At the meeting itself the committee agreed that TPR should be notified of the failed communications, most likely as a breach of law but that was subject to taking further legal advice by 3 September 2021. Assuming that the issue was a breach of law, the committee resolved that it should be notified to TPR by the time of the committee’s September meeting.
60. That meeting took place on 30 September 2021. The committee believed that a breach of law report had been sent to TPR by NPL (not NPTL), but noted that the committee had not seen it and wished it to put more emphasis on the fact that it was employers who had failed to provide the Common Mailbox address, so that NPL had not caused the issue. The committee asked that the report be recalled and circulated to the committee.
61. It was later discovered that a report had not in fact been sent to TPR. A report was eventually sent on 15 October 2021, on the basis that the issue of failed communications in this second category was a breach of law and not a significant event. The report explained that the Gateway system was missing a central email address for 86 out of some 35,000 employers who had participated in the Scheme since its inception, which had resulted in 28,823 statutory communications not being issued since 2018.
62. TPR responded to this report with a series of questions, including asking why it took so long to report the breach. NPL’s answer was that a complex investigation had had to occur into the effect and implications of the breach. TPR also asked whether the breach was being reported as a significant event under section 16 PSA 17. NPL replied that it was not, “in part, on the basis that there was no obvious evidence of meaningful detriment on a widespread / material basis across the membership”. Although members had lost choices, NPL considered that they had not necessarily suffered financial detriment.

Third Category of Communication Failures: Missing email addresses in Gateway 1

63. On 15 February 2022 TPR opened an investigation into the Second Category of Communication Failures, i.e. those described in the section above that had been reported to TPR on 15 October 2021. TPR issued notices under section 72 of PA 04 as part of that investigation. As part of its work to respond to these, on 19 April 2022 NPL discovered that the issue of a lack of common mailbox address had a wider reach than had been appreciated. It not only affected Gateway X but also a previous administration system called Gateway 1. This had led to a further category of communication failures. This was notified to TPR as a breach of law by email on 20 April 2022, following NPTL’s decision earlier that day that the matter should be reported to TPR. This further category was estimated at that time to comprise some 25,000 communications, and NPL estimated that rectification would be required for some 6,000 members.
64. NPL duly updated its breach of law report from 15 October 2021 and provided the updated version on 6 July 2022. That report stated that this third category of communication failures affected an additional 24,931 members, for whom a total of 30,919 statutory communications had not been issued from Gateway 1. These failures were not reported to TPR as a significant event.
65. TPR carried out investigations into this third category of failures, leading to the issue of a Warning Notice to NPL and a Warning Notice to NPTL, both dated 3 August 2023.

The case in the Warning Notices

66. TPR’s case in the Warning Notices was that both NPL and NPTL carried out roles in relation to the Scheme that made them subject to the obligations to report significant events to TPR under section 16 PSA 17 and to report breaches of the law to TPR under section 70 PA 04. TPR argued that NPL and NPTL had breached those obligations in respect of all three categories of communication failures described above, as they had not been reported as a significant event nor as a breach of law “as soon as reasonably practicable”.
67. The Warning Notices explained that the Scheme operated an “auto- enrolment platform (“Gateway”) by which NPL communicates with non-eligible jobholders, job holders and workers of participating employers in the Scheme. The Warning Notices continued: “Arrangements between the Scheme and participating employers allocate responsibility to the Scheme for communicating to members their auto-enrolment in the Scheme, and certain required communications under the AE Regulations1F2 (“statutory communications”). Statutory communications through the Gateway system to members are (or are generally) made by e-mail directly to the member’s own e-mail address or via a “central employer e-mail address” field.
    A systems failure with Gateway occurred on (at least) three occasions.The failure appears to have arisen where the Scheme did not hold a valid e-mail address for a member and where that member’s employer had left the central employer e-mail address field blank. In those circumstances, it appears that certain statutory communications failed to send out to members.”
68. The Warning Notices argued that this systems failure constituted a significant event and that NPL and NPTL were in breach of section 16 PSA 17 for failing to report it as such. The Warning Notices argued that, in the alternative, the systems failure was reported to TPR as a breach of law too late to comply with the obligation in section 70 PA 04 to report “as soon as reasonably practicable”. The Case Team therefore sought the issue of a £50,000 penalty notice to NPTL and the same to NPL.

NPL and NPTL’s Representations

69. NPTL and NPL provided separate Representations in response to the Warning Notices, both dated 10 November 2023. They described the following, under the heading of “Systems”:
    “From March 2014, NPL used a system called Staffcare as an auto-enrolment (“AE”) platform which was used for the administration of various matters including member enrolment communications. Due to limitations with the Staffcare system, a third-party developer was engaged to develop a bespoke system. This led to the introduction in June 2016 of an alternative system called Gateway1 (also known as Gateway Mongo) which was an AE platform (“Gateway1”).
    An updated version of Gateway1 was subsequently developed called GatewayX (“GatewayX”). From the first quarter of 2018, NPL started migrating employers firstly from Staffcare to GatewayX and then from Gateway1 to GatewayX. All employers had been migrated from Staffcare by 31 March 2018 and from Gateway1 by December 2018. NPL continues to use GatewayX.
    The Participation Agreement states that AE statutory communications (“AE Comms”) are delivered in electronic format to the employee’s email address (where provided by the employer). Where the employer does not provide an employee email address, PDF versions of the AE Comms for each employee are sent to the employer’s generic email address as provided by the employer on the cover page of the Participation Agreement (“Common Mailbox”). The Participation Agreement sets out that it is the employer’s responsibility to maintain and monitor the Common Mailbox on a daily basis and to distribute the communications to employees along with any attachments as directed by NPL.”
70. The Representations divided TPR’s case into two allegations. They described “Allegation 1” as an allegation that the failure to deliver 81,619 statutory communications over a 4-year period was a significant event, and “Allegation 2” as an allegation that there had been a failure to report a breach of law within a reasonably practicable period.
71. The Representations stated that NPL and NPTL “strongly refute[s]” Allegation 1. Ten arguments were relied on. Given that NPL and NPTL now accept that they should have reported these failures as a significant event it is not necessary to recite each of these arguments. However, the Case Panel wishes to record certain of them because it profoundly disagrees with several of them for reasons explained under the heading of Analysis below. The Case Panel was concerned that the regulated community should not give those arguments credence in any future similar circumstances:
    (a) NPL and NPTL argued that the systems failure in this case was not a significant event because it did not cause the Scheme to fall foul of the authorisation criteria for Master Trusts. That was said to be in part because the standards required of systems and processes used in running a master trust “do not include 
    facilitating, undertaking, or supporting employers’ auto-enrolment obligations”
    (b) The threshold to report a significant event is that a significant event has occurred “beyond reasonable doubt of a body of trustees, acting reasonably and rationally”.
    (c) The significant events relied on in this case do not concern a failure of the systems or processes “used in running the scheme”. The systems relating to statutory communications are not “involved in running the scheme”; NPTL’s obligations to deliver these communications arise under contract, not statute.
    (d) None of the three categories of communication failures caused “significant detriment” to members, as shown by the very few members who responded when these communications were re-sent to affected members as part of remediation efforts.
72. The Representations also disputed Allegation 2, on the basis that:
    (a) the first category of communication failures was a breach of law but was not likely to be of material significance to TPR because it was not indicative of a wider systemic failure but was caused by certain employers not providing email addresses. Accordingly, it did not need to be reported under section 70(2) PA 04.
    (b) it would not have been reasonable or practicable to report the second category until NPTL and NPL had completed their investigations into it.

TPR’s Response and the Reply of NPL and NPTL

73.  The Case Team issued a single Response to these Representations, dated 17 May 2024. Whilst continuing to consider that the case could properly be analysed as involving a single breach of notification / disclosure obligations, the Case Team now adopted a primary case that the facts involved a sequence of three different, albeit related, notification / disclosure failings. Those failings are said to found “five relevant breaches” (Response, para 40): three breaches of the significant event regime by failing to report each category of communication failures, and two breaches of the breach of law regime by failing to report the first two categories of communication failures within a reasonable period. The Case Team also changed its characterisation of the relevant failure as regards the first category of communication failures. Whereas the Warning Notice had asserted that the communications failures themselves were the significant event to be notified to TPR, the Response argued that what should have been notified was the existence in April 2020 of a backlog in remediating the original communication failures.
74. The Case Team maintained its position that penalties should be issued to NPL and NPTL in the sum of £50,000 each.
75. NPL and NPTL provided a single Reply to TPR’s Response, dated 27 June 2024. This argued that the change of case from a single breach to three different failings was unfair, unreasonable, and unjustified. It maintained NPL and NPTL’s opposition to any penalty notice.

Handover Letter

76. The Case Team wrote to Determinations Panel Support on 30 August 2024, copying in NPL and NPTL, asking the Determinations Panel to make a determination in relation to the regulatory action identified in the Warning Notices. This letter was eight pages long and included some five pages that restated the Case Team’s case and sought to respond to the points made by NPL and NPTL in their Reply. The Handover letter also attached new evidence in the form of two Significant Event Notification Forms that had been given by NPL and NPTL to TPR in May 2020 and December 2021, respectively.
77. NPL and NPTL did not object to the Case Panel taking account of the arguments in this letter, or the new evidence enclosed with it. The Case Panel’s directions gave NPL and NPTL the opportunity to respond to it by way of a position paper but this paper was not submitted in light of the Agreed Statement of Issues. The Case Panel considers that handover letters should not be used to raise new arguments or adduce new evidence, not least as directly affected parties do not have an automatic right to reply to such letters under TPR’s Case Team Procedure.

The relevant law, Codes of Practice and TPR Guidance

78. The Case Panel has set out in full the relevant sections of the law and guidance that are applicable to this case in Appendix 2.
79. The Case Panel’s power to issue penalty notices arises under section 10 of PA 95, subsection 10(1) of which provides: “Where the Authority are satisfied that by reason of any act or omission this section applies to any person, they may by notice in writing require him to pay, within a prescribed period, a penalty in respect of that act or omission not exceeding the maximum amount”.
80. The “maximum amount” that is referred to in this subsection is £50,000 for a corporate body such as NPL and NPTL.
81. For section 10 PA 95 to apply there must therefore be an “act or omission”, “by reason of” which it applies.
82. In this case, the relevant omissions are failures to comply with the notification obligations under section 16 PSA 17 and under section 70(2) PA04: 
    (a) Section 16(6) of PSA 17 states that “Section 10 of the Pensions Act 1995 (civil penalties) applies to a person who fails to comply with subsection (1)”. 
    (b) Section 70(4) states that “Section 10 of the Pensions Act 1995 (c.26) (civil penalties) applies to any person who, without reasonable excuse, fails to comply with an obligation imposed on him by this section.”
83. These notification obligations have been described in paragraphs 21 to 26 above. They operate in different ways, and TPR has issued different guidance and codes of practice in relation to each of them. 
84. As regards section 16 PSA 17, the obligation to report is triggered by the relevant person (mentioned in section 16(2) PSA 17) becoming aware that a “significant event” has occurred in relation to a Master Trust. 
85. Regulation 14 of the Master Trusts Regulations lists the events which amount to “significant events” for the purposes of section 16(1) PSA 17. They include “a failure of the systems or processes used in running the scheme which has a significant adverse effect on the security or quality of data or on service delivery” (Regulation 14(j)).
86. TPR’s Code of Practice 15, dealing with Master Trust Authorisation, gives guidance on the duty to report significant events, and the meaning of the significant event described in Regulation 14(j) of the Master Trusts Regulations. This includes: “Significant events are circumstances arising during the operation of a master trust, which must be notified to us as soon as reasonably practicable once the person is aware that the event has occurred. When a significant event occurs, our focus will be whether we remain satisfied that the master trust continues to meet the authorisation criteria.” “Those required to notify significant events should consider reporting where they are unsure on whether to notify or not.”
    “A failure of the systems and processes used in running the master trust, which has a significant adverse effect on the security or quality of data or on service delivery – we consider notification of this event as soon as reasonably practicable to mean within one working day of the person becoming aware of the failure. We expect a notification to be made where an incident significantly affects member data or member benefits, including those relating to cyber security incidents or near-misses, data integrity issues that impact common/conditional data and any significant IT incidents or near-misses, or any incident where a member has suffered financial or non-financial detriment. Such incidents may also constitute a breach of data protection obligations” (emphasis in original).
87. TPR has also published separate guidance on when and how to notify TPR of the particular significant events. This includes the following description of the significant event listed at Regulation 14(j) of the Master Trusts Regulations: “There is a failure of the scheme’s systems or processes which adversely affects the security or quality of data, or service delivery.”
88. NPL and NPTL’s Representations rightly note that this description omits the word “significantly” before “adversely”, which is necessary in order to align the description to that in Regulation 14(j) of the Master Trusts Regulations: “a failure of the systems or processes used in running the scheme which has a significant adverse effect on the security or quality of data or on service delivery” (emphasis added).
89. The Case Panel has applied the definition in Regulation 14(j) of the Master Trusts Regulations throughout this case.
90. TPR’s guidance on notifying significant events (in relation to a Regulation 14(j) significant event) continues: 
    “You must notify us in writing of this event as soon as reasonably practicable. This should be within one working day of you becoming aware of the failure. 
    1. We anticipate the initial notification should be from the scheme’s trustees.
    2. Examples of a failure of the systems that you should notify us of include the following: …
    o Incorrect member communications that cause detriment to a material number of members or a pattern of repeated communication failures. …
    3.You should prioritise notifying us even if you don’t have the complete information of the event. If you are uncertain of whether you should submit a notification, you should contact your scheme supervisor at TPR.”
91. NPL and NPTL’s Representations argue that this last point is incorrect because it suggests notification should take place even without full information of an event and even where a person is uncertain whether to notify. NPL and NPTL argue that because section 16(1) PSA 17 requires notification of “the fact” that a significant event has occurred, this means that the notifier must be certain that a significant event has occurred before notifying TPR, otherwise they are not notifying a “fact” that has occurred.
92. NPL and NPTL also argue that section 16 PSA 17 applies only where the threshold for a significant event has been “definitively met beyond the reasonable doubt of a body of trustees, acting reasonably and rationally.”
93. The Case Panel does not agree with this interpretation of section 16(1) PSA 17. The section reads: “Where a person mentioned in subsection (2) becomes aware of the fact that a significant event has occurred in relation to an authorised Master Trust scheme, the person must give notice of that fact, in writing, to the Pensions Regulator as soon as reasonably practicable”.
94. The Case Panel prefers to see the word “fact” in the beginning of section 16(1) as intended to be read together with the later reference to “that fact”. The word makes clear that what must be notified is “that fact”, i.e. the fact that a significant event has occurred. That does not mean that the notifier must be satisfied beyond reasonable doubt that a significant event has occurred; nothing in the section imports the criminal standard of proof to what is otherwise a section concerned with statutory obligations to report and the civil law consequences for failures to comply. The Case Panel agreed with the Case Team that all that is required (in order for there to be a requirement to notify) is (a) for the person to be aware of the occurrence of an event, and (b) for this event to constitute a significant event.
95. TPR’s Code of Practice gives guidance on the duty under section 70 PA 04 to report breaches of law. That Code of Practice was issued by TPR on 28 March 2024. It is a combined code (in accordance with section 90A(6)(a) of PA 04). It replaced, among other things, a code of practice that was in force at the time of the events described above and which gave guidance on the duty under section 70 PA 04 (“Code of Practice 1”). In the paragraphs that follow, Code of Practice 1 is quoted, as it was in force at the relevant time.
96. It may be recalled that section 70(2) PA 04 provides that: “Where the person has reasonable cause to believe that –
    (a) A duty which is relevant to the administration of the scheme in question, and is imposed by or by virtue of an enactment or rule of law, has not been or is not being complied with, and
    (b) The failure to comply is likely to be of material significance to the Regulator in the exercise of any of its functions, he must give a written report of the matter to the Regulator as soon as reasonably practicable”.
97. TPR’s Code of Practice 1 stated that the phrase “administration of the scheme” will be interpreted broadly: “In view of its statutory objectives, the Pensions Regulator interprets ‘administration’ widely in the context of the need to report breaches. It is much wider than just those tasks normally associated with the administrative function such as keeping records, dealing with membership movements, calculating benefits and preparing accounts, though all these are included within it. The Pensions Regulator interprets administration to include such matters as the consideration of funding in defined benefit schemes, investment policy and investment management, as well as the custody of invested assets; indeed anything which could potentially affect members’ benefits or the ability of members and others to access information to which they are entitled” (emphasis added).
98. TPR’s Code of Practice 1 * recognised that “having a reasonable cause to believe that a breach has occurred means more than merely having a suspicion that cannot be substantiated”. However, the trigger for the obligation is not simply an awareness that a breach of law has occurred; it is sufficient that the reporter has “reasonable cause” to believe that it has.
99. Code of Practice 1 also had useful guidance on which breaches of law are likely to be “of material significance” to TPR. It lists relevant factors on that question as: 
    (a) The cause of the breach;
    (b) The effect of the breach;
    (c) The reaction to the breach; and
    (d) the wider implications of the breach.
100. Under the first factor, Code of Practice 1 noted that a breach is likely to be of material significance to TPR when it was caused by poor governance, inadequate controls resulting in deficient administration, or slow or inappropriate decision-making practices.
101. Under the second factor, Code of Practice 1 stated that TPR considered certain matters to be particularly important, including that members receive accurate, clear and impartial information without delay. 
102. Under the third factor, Code of Practice 1 noted that a breach is likely to be of material significance to TPR when it “does not receive prompt and effective action to remedy the breach and identify and tackle its cause to minimise risk of recurrence”.
103. Finally, under the fourth factor, Code of Practice 1 stated that the wider implications of a breach should be taken into account.

The parties’ cases by the time of the Determination Meeting

104. As set out in paragraph 73 above the Case Team now relies on five omissions and says that section 10 applies to NPL and NPTL by reason of each of those omissions: 
     (a) The failure to report the backlog in resolving the first category of communications failures (described by the parties as the 2020 Incident) to TPR as a significant event, contrary to section 16 PSA 17. 
     (b) The failure to report that same backlog to TPR under section 70(2) PA 04, because the event comprised multiple breaches of law in not sending statutory communications.
     (c) The failure to report the second category of communications failures (described by the parties as the 2021 Gateway X Issue) to TPR as a significant event, contrary to section 16 PSA 17.
     (d) The failure to report that category of communications failures to TPR as a breach of the law until 15 October 2021. In the circumstances the Case Team argues that this was too late to comply with the obligation to report as soon as reasonably practicable.
     (e) The failure to report the third category of communications failures (described by the parties as the 2022 Gateway 1 Issue) to TPR as a significant event, contrary to section 16 PSA 17.
105. The Case Team seeks one penalty in respect of these five alleged breaches against each of NPL and NPTL.
106. In the Agreed Statement of Issues NPL and NPTL accept that section 10 PA 95 applies to each of them by virtue of (i) the failure to comply with their obligation under section 16 PSA 17 in respect of the three events described above, and (ii) the failure to comply with their obligation under section 70(2) PA 04 in respect of the first two of those three events. The Statement of Issues defines the three events as follows:
     “• The 2020 Incident: the bounceback backlog (including in respect of auto-enrolment communications) identified in April 2020. 
     • The 2021 Gateway X Issue: the email communications failure in the Gateway X System identified in May 2021. 
     • The 2022 Gateway 1 Issue: the email communications failure in the Gateway 1 System identified in April 2022”.
107. NPL and NPTL agree that “A single separate penalty should be imposed on each of NPL and NPTL” and that “In respect of each of NPL and NPTL, that single penalty should take into account each of the [five] matters in respect of which s.10 PA 1995 applies”.
108. The Agreed Statement of Issues also recites the parties’ agreement that:
     “The penalty to be imposed on each of NPL and NPTL should be approached on the basis that the penalty is a response to breaches that together are in Band 3 for the purposes of the Monetary Penalties Policy. Without limitation, it should also take into account the fact that the breaches caused members financial and/or non-financial detriment. For the avoidance of doubt, this agreement does not imply that NPL and NPTL agree that the penalty should be above £25,000 (i.e. above the range applicable to breaches within Band 2)”.
109. The parties thus identify one remaining issue, which it is for the Case Panel to resolve, namely the amount of penalty to be imposed on (i) NPL and (ii) NPTL. 

Analysis

110. Although the parties have reached agreement on all but the level of penalty to be imposed on NPL and NPTL, the Case Panel only has jurisdiction to impose a penalty under section 10 PA 95 if it is “satisfied” that that section applies to NPL and NPTL due to an act or omission.
111. The Case Panel therefore considered for itself whether it was satisfied that section 10 PA 95 applied to both NPL and NPTL by reason of the omissions alleged against them, namely failures to comply with section 16 PSA 17 and section 70 PA 04.
112. The Case Panel was satisfied that NPL and NPTL both fell within the categories of persons that are subject to those sections, as a scheme strategist and funder, and as trustee of the Scheme respectively.

Significant Events

113. The Case Panel was satisfied that each of the three categories of communications failures was a significant event within section 16 PSA 17.
     As to this: 
     (a) Regulation 14(j) of the Master Trusts Regulations defines the relevant event in this case as “a failure of the systems or processes used in running the scheme which has a significant adverse effect on the security or quality of data or on service delivery”.
     (b) The Case Panel considered that each of the three categories of communication failures in this case amounted to a failure of the systems and processes used in running the scheme. As noted at paragraph 43 above, NPL’s Risk Management document of 1 June 2020 described the root cause of the first category of communication failures as “poorly documented process with insufficient oversight meaning that GWNR [i.e. Gateway No Reply] cases were not being processed and were not included in MI Reporting. As a result, these cases have built into a backlog.” An NPL report into the second category of communication failures described it as a “system design error” (para 59 above).
     (c) The Case Panel rejected an argument in NPL’s and NPTL’s Representations that the systems relating to statutory 
     communications are not systems or processes “used in running the scheme” but are systems set up to support employer communications which NPL was obliged by contract (not by law) to deliver. The Case Panel rejected this argument for two reasons: 
     i. The evidence shows that the Gateway system was not only used for sending statutory communications that employers were obliged to send. NPL’s and NPTL’s Representations state that the Gateway System “supports the administration of the Scheme”. On 1 June 2021 a Customer Experience team leader of NPL reported that the Second Category of Communication Failures appeared to include 102 regulatory communications and 342 “service comms to the members (opt in/out 
     confirmation or member account created email)”. This shows Gateway being used in running the Scheme. That is consistent with the use to which Gateway’s predecessor 
     was put. NPL’s and NPTL’s Representations describe it as used “for the administration of various matters including member enrolment communications”. 
     ii. NPL’s Representations show that it assumed the obligation to send statutory notices as part of its contractual obligations in “Participation Agreements”. NPL defines these agreements in its Representations as agreements that are entered into “between NPL and a Participating Employer relating to an employer’s participation in the Scheme”. The Case Panel agrees that the obligation to send statutory notices under the auto enrolment legalisation falls on employers as part of their “participation” in an auto-enrolment scheme, and as part of the running of the scheme. In the Case Panel’s view, it is part of “running the scheme” that statutory notices are sent to employees with membership rights in the Scheme, such as enrolment notices to inform them that they have been enrolled in the scheme but have a right to opt out. A failure to send such notices appears to the Case Panel to be a failure in the proper running of the Scheme. Accordingly, NPL and NPTL should have treated the systems and processes used to deliver these notices as systems and processes that were used in running the Scheme. 
     (d) The Case Panel was satisfied that the three categories of communication failures in this case each had a “significant adverse effect” on service delivery. Each of them concerned over 20,000 statutory notices, each of which provided important information to jobholders or workers. The Case Panel considered it clear that the failure to deliver these notices caused non-financial detriment to their intended recipients, by depriving them of choices that statute required them to be given. Further, given the number of notices affected, it is very likely that some intended recipients have also suffered financial detriment either by remaining in the Scheme when they would have opted out or by remaining out of the Scheme when they would have opted in. The Case Panel was not impressed with the argument in some of the contemporaneous documents of NPL that intended recipients had not lost financially because by remaining outside the Scheme their salary would have been higher even though scheme benefits were lower. That fundamentally misunderstands the value of pension benefits over the long term of a saver’s lifetime and disregards the importance of savers 
     making timely informed choices.
     (e) The Case Panel did not need to rely on TPR’s Code of Practice 15 or associated guidance in forming this view. The Case Panel considers its conclusion is consistent with that Code and Guidance. It notes that NPL spent considerable time in the contemporaneous documents considering the phrase “pattern of repeated communication failures”, which is taken from TPR’s guidance as an example of a significant event within Regulation 14(j) of the Master Trusts Regulations. Seen from the perspective of the intended recipients, each of the three categories of communications failures had the same effect and would have appeared a “pattern” of repeated communication failures.
     (f) The Case Panel disagreed with an argument found in NPTL’s Representations that “so long as trustees exercise their decision-making powers in an informed, rational and reasonable way within a robust governance framework, they have acted appropriately and proportionately and there should be no need for additional scrutiny. The legal and regulatory framework for occupational pension schemes provides trustees with subjectivity and flexibility in their decision-making, which is reflected in the reporting regime for significant events and breaches of law”. In the Case Panel’s view such arguments might be relevant in a claim for breach of trust against NPTL but are unlikely to provide a defence to regulatory proceedings based on notification failures. The reporting regime for significant events and breaches of law has limited room for subjective assessments. In particular the key question of whether an event is a “significant event” within section 16(1) PSA 17 is an objective question, as is the question of whether a failure to comply with a legal requirement is likely to be of material significance to TPR and the question of whether reports were made as soon as reasonably practicable.
114. The Case Panel was satisfied that each of NPL and NPTL had “become aware” of these significant events for the purposes of section 16(1) PSA 17. The Case Panel put weight on the fact that NPL and NPTL had admitted this to be the case in the Statement of Agreed Issues. Further, the evidence included minutes of NPTL’s Operations and Membership Committee and its successor the Operations Committee, which received information on the relevant events and discussed remediation. These meetings were attended by representatives of NPL and NPTL. The Case Panel considered it reasonable (in the absence of argument on the point) to treat the knowledge and awareness of those who attended those meetings as knowledge and awareness to be attributed to NPL and NPTL for the purposes of section 16(1) PSA 17, given the purposes of the 
     meetings included making decisions on reporting to TPR (see Meridian Global Funds Management Asia Ltd v The Securities Commission [1995] 2 AC 500 at 506A -507F). NPL’s Representations also strongly suggest that the awareness of NPL should also be treated as the awareness of NPTL. NPL stressed how it worked jointly with NPTL: “[NPL’s] priority is to work collaboratively and jointly with NPTL in assessing and reporting issues”.
115. Finally, the Case Panel was satisfied that none of these three significant events had been reported to TPR as soon as reasonably practicable, as required by section 16(1) PSA 17, in circumstances where they had not been reported as significant events at all.

Breaches of Law

116.  The Case Panel was also satisfied that the first and second categories of communications failures described above had not been reported to TPR in accordance with section 70 PA 04. As to this:
     (a) The communications failures constituted failures to comply with duties relevant to the administration of the Scheme, which are imposed by virtue of an enactment. The duties in question are the duties to send statutory communications (assessment notices, enrolment notices and postponement notices). Those duties are imposed by the Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 (S.I. 2010/772), which were made under the Pensions Act 2008 (“PA 08”) and other enactments as listed in the preamble to those regulations.
     (b) Once they became aware of the failures, including from their representatives’ attendance at meetings of the Operations Committee and Operations and Membership Committee, NPL and NPTL had “reasonable cause to believe” that the duties described above had not been complied with.
     (c) NPL and NPTL also had reasonable grounds to believe that these failures were likely to be of material significance to TPR in the exercise of any of its functions. This was partly because of their scale (29,007 failed statutory communications were discovered in the second category of communications failures and 21,877 failed statutory communications were discovered in the first category of communications failures, each of which deprived individuals of valuable choices that Parliament has legislated to ensure that they received). The failures were also likely to be materially significant to TPR in relation to its ongoing supervisory role and in ensuring the authorisation criteria continued to be met, as they cast real doubt on the operation of the computer systems used by NPTL and NPL in relation to the Scheme. This is particularly true in relation to the second category, as NPL and NPTL had recently been working to rectify the first category. The significance of a further set of communications failures should have been readily apparent.
     (d) The failures directly engage TPR’s objectives under section 5 of PA 04 to promote, and to improve understanding of, the good administration of work-based pension schemes, and to maximise compliance with the duties under Chapter 1 of Part 1 of PA 08 (including the employers’ duties to provide information by statutory notices). 
     (e) Although the second category of communication failures was eventually reported to TPR as a breach of law, it was not reported as soon as reasonably practicable. NPL discovered the first of the failures on 20 May 2021 and on 1 June 2021 NPL learned that 87 employers had missing Company Mailbox addresses. No breach of law report was made until 15 October 2021. The Case Panel considers this delay to be due to a misplaced desire to investigate more on the impact of the breach in circumstances where its scale and cause and effect on members were already sufficiently clear to show they would be of material significance to TPR.
     (f) The first category of communication failures has still not been reported to TPR. 
     (g) Although the Case Panel makes no finding of a deliberate attempt to conceal the failures, some arguments deployed in the contemporary documents and NPTL’s and NPL’s Representations against reporting the failures to TPR are of concern to the Case Panel, as they are disturbingly and obviously wrong. For example, the statement that TPR could not impose penalties for the underlying breaches of law in this case is irrelevant to the operation of section 70 PA 04 and should not have been advanced as an argument for not reporting. The argument that workers have not lost financially if they have not joined the Scheme, which appears to have been relied on to lessen the significance of the failures, will obviously be wrong for many individuals.
     (h) NPL and NPTL did not advance a case that there was a “reasonable excuse” for the failures to notify, within the meaning of section 10(4) of PA 04.
117. In these circumstances the Case Panel was satisfied that NPL and NPTL had failed to comply with obligations imposed on them by section 16 PSA 17 and section 70 PA 04, and that as a result section 10 PA 95 applied to them and gave the Case Panel jurisdiction to impose a penalty on them.

What penalty should be imposed on each of NPL and NPTL?

One breach or several?

118. The Case Panel considers it convenient to start by resolving a dispute between the parties as to whether the facts of this case are best seen as three different (albeit related) failures, or one mistake which applied in three scenarios.
119. This dispute is neatly summarised in the Agreed Statement of Issues. In that document NPL and NPTL state:
     “although the Case Team puts it [sic] primary case as “three different (albeit related and similar) notification / disclosure failures” they “also consider that that facts of this case may properly be analysed as involving a single breach of notification / disclosure (of either the significant events regime or the breach of law regime)”. NPL and NPTL agree with that analysis – in reality this was one mistake which applied in three scenarios”.
120. The Case Team responded to this by stating that there were “multiple breaches”, but that they were appropriately dealt with through a single penalty.
121. The Case Panel does not agree that the facts of this case are to be analysed as a single breach of notification requirements, or as one mistake which applied in three scenarios. Instead, on the facts agreed between the parties and recorded in the Agreed Statement of Facts, there were at least five breaches. The Case Panel relied on the following: three breaches of section 16 PSA 17 and two breaches of section 70(2) PA 04 by each of NPL and NPTL.
122. The Case Panel notes that in another case in the future, and depending on the facts, it may be that a single failure to send a statutory communication is important enough to mean that it is likely to be of material significance to TPR in the exercise of its functions, and therefore must be notified as a breach of the law under section 70(2) PA 04. Similarly, a single failure may be, or be evidence of, a significant event under section 16 PSA 17.
123. Here there were 81,619 communications that should have been sent to employees or others entitled to them. From the point of view of savers, each of those communications is an important statement of rights and choices. The Case Panel would not want this decision to be read as setting any precedent that failures in sending such notices can always be grouped together for notification purposes and / or that multiple failures to send such communications will always be seen as one breach of law or one significant event.
124. Further, the Case Panel has formed the clear view that the underlying issue in this case is a failure to send statutory communications due to invalid or missing email addresses. That failure appears to have been due to similar failures in systems design coupled with failures in quality control processes that should have identified, for example, bounceback emails or a missing common employer email address. The Case Panel considers that a shared underlying issue forms the basis for each of the five breaches the parties have agreed took place. This ought to have led NPL and NPTL to take the failings they discovered in 2021 and 2022 in particular far more seriously and led to quicker reporting to TPR, because what had occurred was in essence a repeat of past failures but affecting thousands of further individuals.

One penalty or several?

125. The parties agree that TPR has power to impose one penalty under section 10 PA 95 in a case where there are multiple acts or omissions by reason of which section 10 PA 95 applies.
126. The Case Panel agrees with this as a matter of the proper construction of section 10(1) PA 95: 
     (a) Section 10(1) of PA 95 states that where TPR is satisfied that by reason of any act or omission this section applies to any person, it may by notice require the person to pay a penalty “in respect of that act or omission not exceeding the maximum amount”. (b) In some cases, TPR will be satisfied that section 10 applies to a person by reason of only one act or omission. In such a case, TPR may require the person to pay a penalty in respect of that act or omission. 
     (c) It is also open to TPR to be satisfied that section 10 applies to a person by reason of each of a number of acts or omissions.
     (d) In such a case, and depending on the way the case is put in the Warning Notice, the Case Panel considers that TPR may require the person to pay one, or more than one, penalty:
     i. TPR may require the person to pay a separate penalty in respect of each of the acts and omissions. (This was the approach taken in the Case Panel’s decision regarding the McDonald’s Franchisees Pension Scheme, discussed below.) TPR would, in effect, be utilising the section 10 machinery separately in respect of each act or omission. 
     ii. Alternatively, TPR may require the person to pay one penalty in respect of the multiple acts or omissions that have led to section 10 applying. The penalty is to be “in respect of that act or omission”; in a multiple act or omission case, it seems to the Case Panel that those words can refer back to more than one of the acts or omissions that gave TPR its jurisdiction. That approach reads “act or omission” in section 10(1) as including “acts or omissions”, in reliance on section 6 of the Interpretation Act 1978. This provides that “In an Act, unless the contrary intention appears – (c) words in the singular include the plural.” Consequently the phrase “in respect of that act or omission” includes “in respect of more than one of those acts or omissions”. The approach of multiple omissions leading to one penalty was taken in the Case Panel’s decision regarding the Pakistan International Airlines Retirements and Death Benefits Scheme at [47].
127. The Case Panel noted that in the case of the McDonald’s Franchisees Pension Scheme that Case Panel determined to issue multiple penalties in respect of multiple acts and omissions, including failures to comply with section 70 PA 04, but said at [103] that “In this case the Panel concluded that separate penalties were appropriate, rather than just one. The importance of this point can be overstated however. If the Panel had treated the separate breaches as one overall course of conduct, resulting in only one penalty, it would have been a penalty in a higher sum. The Panel would then have regarded the course of conduct as sufficiently serious to merit treatment as a band 2 breach rather than band 1.” The Case Panel in this case agreed with that approach, which recognises that multiple breaches can result in one penalty. In that case, this was on the basis of treating the breaches as one course of conduct, but that does not alter their status as multiple breaches. It simply involves focussing on the course of conduct that is made up of the separate breaches.
128. The Warning Notices in this case sought the issue of only one penalty to NPL and only one penalty to NPTL. The Case Team did not alter this request when it adopted its primary argument of multiple breaches. 
129. Each of those penalties cannot exceed £50,000 (see section 10(2)(a) of PA 95). No question therefore arose in this case of multiple penalties per target and / or an overall sum exceeding £50,000 per target. The Case Panel noted, however, that in future cases involving multiple breaches Warning Notices could seek multiple penalties, as occurred in the McDonald’s case.

Whether to impose a penalty upon each of NPL and NPTL and, if so, the amount of the penalty: The MPP

130. In making its decision the Case Panel had regard to the matters set out in section 100 PA 04, as well as to the objectives of TPR set out in section 5 PA 04. The Case Panel also had regard to TPR’s Monetary Penalties Policy of August 2017 (“MPP”).
131. The MPP provides a framework for the assessment of the amount to be imposed by way of monetary penalty (if any). Assuming that the relevant statutory threshold for imposing a monetary penalty is met, the MPP identifies the first question as whether to impose a penalty at all. This question is to be answered by looking at the underlying objective in imposing a penalty, the nature and extent of the breach, and the person concerned and their conduct.
132. The Case Panel concluded that it should impose a monetary penalty on NPL and on NPTL in respect of their breaches of section 16 PSA 17 and section 70 PA 04. This was because the breaches affected thousands of individuals, occurred over a long period, and concerned underlying failures that resulted in financial and/or non-financial detriment to savers and cast doubt on the systems used in the administration of the Scheme. The Case Panel considered that imposing a penalty would send the right message to the regulated community about the importance of these statutory obligations, and thus promote the good administration of pension schemes in the future.
133. The MPP sets out three principles and a framework that guides TPR in determining the amount of a penalty. The principles are: “The penalty should be proportionate to the nature of the breach and any harm caused (eg the number of members affected and/or the level/significance of detriment). The amount of the penalty should aim to change the behaviour of the person in breach. The penalty should aim to deter repetition of the breach among the wider regulated community.”
134. The framework comprises three “bands” of breach, depending on the nature and impact (or potential impact) of the breach, which attract different levels of penalty. Thus band 1 is the lowest level, attracting a penalty between £0 and £10,000 for a corporate, while band 3 is the highest level, attracting a penalty between £0 and £50,000 for a 
     corporate. The MPP gives examples of band 1 breaches, including failing to submit a scheme return on time, and band 3 breaches including a master trust operating without authorisation.
135. The MPP provides that once the Case Panel has decided to impose a monetary penalty, it will then decide into which band the breach or breaches in question fall. The MPP describes that in assessing the appropriate band, the Case Panel is guided by TPR’s statutory objectives and by the circumstances of the case. Once it has decided on a band, the Case Panel will determine the appropriate starting point within that band for the penalty, and then adjust that starting point to take account of the facts of each case. Potentially relevant factors for this stage are listed in the MPP.
136. The MPP makes clear that different considerations may arise on a case by case basis, which may result in the appropriate penalty for a particular breach being higher or lower than the middle of the band in which the breach falls in the MPP.

The amount of the penalty:(1) Which band to apply?

137. The Agreed Statement of Issues contains the following regarding the appropriate band for the penalties in this case:
     “The penalty to be imposed on each of NPL and NPTL should be approached on the basis that the penalty is a response to breaches that together are in Band 3 for the purposes of the Monetary Penalties Policy. Without limitation, it should also take into account the fact that the breaches caused members financial and/or non-financial detriment. For the avoidance of doubt, this agreement does not imply that NPL and NPTL agree that the penalty should be above £25,000 (i.e. above the range applicable to breaches within Band 2).”
138. The Case Panel agreed that the appropriate band for the breaches in this case, taken together, was band 3. Although the MPP cites “failure to report a significant event” as an example of a band 2 breach, in this case the number of failures, the period they cover, and the importance of the underlying statutory notices all point to a band 3 penalty.
139. These factors also led the Case Panel to adopt a starting amount at the top of the band, i.e. £50,000. The Case Panel had regard to the crucial importance of prompt and effective reporting to TPR in allowing TPR to carry out its functions. This case involved five breaches of reporting obligations, over a prolonged period (some of the communication failures have still not been notified to TPR as significant events or breaches of law).
140. The Case Panel also had regard to the importance of the underlying statutory obligations to provide information and choices to jobholders and workers, and the detriment to them from being deprived of those choices. The MPP specifically allows the Case Panel to consider the underlying breaches in a case such as this: 
     “Certain requirements arise where there has been a breach of another duty (for example, the duty to report a breach of the law to us or to comply with an improvement notice or compliance notice). In assessing the secondary breach we will take into account the nature and impact (or potential impact) of the underlying breach”.
141. The Case Panel considered that penalties below £50,000 did not provide adequate deterrence, particularly given the size and resources of entities such as NPL and NPTL and the number of people affected by the breaches. Indeed, had the Warning Notices in this case sought multiple penalties rather than one, the Case Panel might well have determined to issue more than one penalty to each of NPL and NPTL and thus impose on them a requirement to pay significantly more than £50,000 each.

The amount of the penalty: (2) Mitigating factors

142. In Annex A to the Agreed Statement of Issues, NPL and NPTL raised points in mitigation. The Case Panel considered them in turn.
143. As regards the nature of the breaches and why they occurred, NPL and NPTL stated that at the time of discovery of the issues, NPL and NPTL undertook a thorough governance process to assess whether they were reportable. The Case Panel accepts that there was evidence that NPL and NPTL considered whether to report the issues as breaches of law, and that they considered whether to report the second and third categories of communication failures as significant events. However, that consideration was too slow and reached the wrong conclusions for the wrong reasons, as described above. The Case Panel was very concerned that some of the contemporaneous evidence suggested that the impact of failing to provide timely statutory notices to members and jobholders was minimised.
144. NPL and NPTL stated that there was no deliberate attempt to mislead TPR in this case. The Case Panel accepted this.
145. Finally, NPL and NPTL described changes they had made to enhance their governance processes going forwards. These include lowering their threshold for reporting significant events and reporting them “in cases of any doubt”. These changes are welcome, but the Case Panel considered they should not lead to a reduction in the penalty amount when considered together with the circumstances of the case as a whole. Indeed, the Case Panel noted that that it was not until eight days before the Determination Meeting that NPL and NPTL agreed that they were in breach of section 16 PSA 17 or section 70 PA 04 in this case.
146. As regards the harm caused, NPL and NPTL now “accept that there will have been some financial and non-financial detriment to members as a result of the Issues”. That is welcome; as noted above, NPL’s contemporaneous documents include incorrect and disturbing arguments that members suffered no material detriment because it could not be shown they had suffered financial loss.

The amount of the penalty: (3) Aggravating factors

147. The MPP lists a number of potentially aggravating factors that may apply in cases that come before the Determinations Panel and may justify increasing the amount of any penalty. The Case Panel considered the following factors applied in this case, and provided further support for a penalty at the top of band 3:
     (a) the track record of the person in complying with their duties and obligations – the Case Panel noted the history of regulatory action against NPTL and NPL described in the Factual Background section above, albeit not for failures to notify to TPR.
     (b) whether the breach could have easily been prevented – the Case Panel considered the breaches could have been; indeed at least one member of the Trustee board suggested to the remainder of the board on more than one occasion that reporting and notification of these matters to TPR should occur, but no reporting took place. 
     (c) the extent to which the breach was caused or exacerbated by circumstances outside the person’s control – although NPL and NPTL have stressed in the past that the employers’ failures to provide email addresses caused or contributed to the communication failures, the underlying system failures and failures to notify were matters solely within the control of NPL and NPTL. 
     (d) where the person is a trustee or pension board member, whether they are able to demonstrate that they possess adequate knowledge and understanding and have a training schedule in place – the Case Panel was not satisfied that NPTL had demonstrated this in relation to the events of this case, as on several occasions over several years they reached the wrong conclusions on reporting to TPR. The Case Panel notes NPL and NPTL’s eventual agreement to the breaches and to amending its governance process.
     (e) the conduct of the person once issues have been identified – the Case Panel has already stated that there were failures to report in this case on multiple occasions. The Case Panel also noted the unacceptably slow pace of remedying the first category of communication failures, leading to the backlog that was in turn “discovered” in April 2020, and the time taken for NPL and NPTL to accept that breaches had taken place at all.
     (f) the speed and co-operation shown to address any issues effectively, including both remedying any detrimental impact on members and preventing future breaches – the Case Panel repeats the points above and notes that had TPR been informed of the communications failures promptly, the later tranches of failure may have been avoidable. 
     (g) whether the person has expertise, or represents, promotes, or holds themselves out as having expertise, in an area relevant to the breach – the Case Panel noted that one of the directors of NPTL is Dalriada Trustees Limited, which does profess such expertise. 
     (h) whether the trustee or pension board member(s) acts in relation to multiple schemes, and / or is or includes on its board a professional trustee – this also applies due to the presence of Dalriada Trustees Limited on NPTL’s board.
148. In conclusion, the Case Panel considered that penalties of £50,000 to each of NPL and NPTL were appropriate (within the limits imposed by section 10(1) PA 95, i.e. the fact that only one penalty had been sought in each Warning Notice).

Conclusion

149. For these reasons the Case Panel determined to issue:
     (a) a penalty notice to NPL in the sum of £50,000, and 
     (b) a penalty notice to NPTL in the sum of £50,000.
150. By virtue of section 96(5) of PA 04 a penalty notice will not be issued during the 28-day period within which the determination to which it relates may be referred to the Upper Tribunal and, if so referred, until the reference and any appeal against the Upper Tribunal’s determination has been disposed of. If no referral to the Upper Tribunal is made within 28 days, then a penalty notice will be issued.
151. Appendix 1 to this Determination Notice contains important information about the right to refer each of the Case Panel’s determinations to the Upper Tribunal.

Signed:
Case Chair: Antony Townsend
Dated: 22 November 2024

Appendix 1: Referral to the Tax and Chancery Chamber of the Upper Tribunal

You have the right to refer this determination to the Tax and Chancery Chamber of the Upper Tribunal (“the Tribunal”).

A reference to the Tribunal is made by way of a written notice signed by you or your representative on your behalf and sent or delivered to the Tribunal with a copy of this Determination Notice. The reference notice must be received by the Tribunal no later than 28 days after this Determination Notice is given to you, unless you obtain an extension from the Tribunal.

The Tribunal’s address is:

Upper Tribunal
(Tax and Chancery Chamber)
Fifth Floor 
Rolls Building
Fetter Lane
London
EC4A 1NL
Tel: 020 7612 9730

The detailed procedures for making a reference to the Tribunal are contained in section 103 PA 04 and the Tribunal procedure rules.

You should note that the Tribunal procedure rules provide that at the same time as filing a reference notice with the Tribunal, you must send a copy of the reference notice to TPR. Any copy reference notice should be sent to:

Determinations Panel Support 
The Pensions Regulator
Telecom House
125-135 Preston Road
Brighton 
BN1 6AF

Tel: 01273 811852

A copy of the form for making a reference, FTC3 ‘Reference Notice (Financial Services)’, can be found at: https://www.gov.uk/government/publications/form-ftc3-reference-notice-financial-services

Appendix 2: Relevant law, Codes of Practice and TPR Guidance

PA 95

Section 10 – Civil penalties

(1) Where the Authority are satisfied that by reason of any act or omission this section applies to any person, they may by notice in writing require him to pay, within a prescribed period, a penalty in respect of that act or omission not exceeding the maximum amount.

(2) In this section “the maximum amount” means– (a) £5,000 in the case of an individual and £50,000 in any other case, or (b) such lower amount as may be prescribed in the case of an individual or in any other case, and the Secretary of State may by order amend paragraph (a) by substituting higher amounts for the amounts for the time being specified in that paragraph.

(3) Regulations made by virtue of this Part may provide for any person who has contravened any provision of such regulations to pay, within a prescribed period, a penalty under this section not exceeding an amount specified in the regulations; and the regulations must specify different amounts in the case of individuals from those specified in other cases and any amount so specified may not exceed the amount for the time being specified in the case of individuals or, as the case may be, others in subsection (2)(a).

(4) An order made under subsection (2) or regulations made by virtue of subsection (3) do not affect the amount of any penalty recoverable under this section by reason of an act or omission occurring before the order or, as the case may be, regulations are made.

(5) Where–
(a) apart from this subsection, a penalty under this section is recoverable from a body corporate or Scottish partnership by reason of any act or omission of the body or partnership, and
(b) the act or omission was done with the consent or connivance of, or is attributable to any neglect on the part of, any persons mentioned in subsection (6), this section applies to each of those persons who consented to or connived in the act or omission or to whose neglect the act or omission was attributable.

(6) The persons referred to in subsection (5)(b)–
(a) in relation to a body corporate, are–
(i) any director, manager, secretary, or other similar officer of the body or a person purporting to act in any such capacity, and 
(ii) where the affairs of a body corporate are managed by its members, any member in connection with his functions of management, and 
(b) in relation to a Scottish partnership, are the partners.

(7) Where the Authority requires any person to pay a penalty by virtue of subsection (5), they may not also require the body corporate, or Scottish partnership, in question to pay a penalty in respect of the same act or omission.

(8) A penalty under this section is recoverable by the Authority.

(8A) Any penalty recoverable under this section–
(a) shall, if the county court so orders, be recoverable under section 85 of the County Courts Act 1984 or otherwise as if it were payable under an order of that court; and
(b) may be enforced as if it were an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland.

(9) The Authority must pay to the Secretary of State any penalty recovered under this section.

(10) The Authority may not require a person to pay a penalty under this section in respect of an act or omission if the Authority have issued a notice to the person under section 88A of the Pensions Act 2004 (financial penalties) in respect of the same act or omission. 

PSA 2017

Section 16 – Duty to notify Regulator of significant events

(1) Where a person mentioned in subsection (2) becomes aware of the fact that a significant event has occurred in relation to an authorised Master Trust scheme, the person must give notice of that fact, in writing, to the Pensions Regulator as soon as reasonably practicable.

(2) The persons are–
(a) a trustee of the scheme; 
(b) a person who (alone or with others) has power to appoint or remove a trustee;
(c) a person who (alone or with others) has power to vary the terms of the trust under which the scheme is established (where the scheme is established under a trust); 
(d) a person who (alone or with others) has power to vary the scheme (where the scheme is not established under a trust); 
(e) a scheme funder; 
(f) a scheme strategist; 
(g) a person who provides legal, financial or actuarial advice in relation to the scheme; 
(h) a person who manages the scheme administration services; 
(i) a person acting in a capacity specified in regulations made by the Secretary of State.

(3) The Secretary of State must make regulations setting out the events that constitute significant events for the purposes of this section.

(4) No duty to which a person is subject is to be regarded as contravened merely because of any information provided to the Pensions Regulator under this section.

(5) A person is not required by this section to disclose anything in respect of which a claim to legal professional privilege (or, in Scotland, to confidentiality of communications) could be maintained in legal proceedings.

(6) Section 10 of the Pensions Act 1995 (civil penalties) applies to a person who fails to comply with subsection (1).

(7) The first regulations that are made under subsection (3) are subject to affirmative resolution procedure.

(8) Any subsequent regulations under subsection (3), and regulations under subsection (2), are subject to negative resolution procedure.

PA 04

Section 5 – Regulator’s objectives

(1) The main objectives of the Regulator in exercising its functions are–
(a) to protect the benefits under occupational pension schemes of, or in respect of, members of such schemes,  (b) to protect the benefits under personal pension schemes of, or in respect of, members of such schemes within subsection (2), 
(c) to reduce the risk of situations arising which may lead to compensation being payable from the Pension Protection Fund (see Part 2), 
(cza) in relation to the exercise of its functions under Part 3 only, to minimise any adverse impact on the sustainable growth of an employer,
(ca) to maximise compliance with the duties under Chapter 1 of Part 1 (and the safeguards in sections 50 and 54) of the Pensions Act 2008, and
(d) to promote, and to improve understanding of, the good administration of work-based pension schemes. 

(2) For the purposes of subsection (1)(b) the members of personal pension schemes within this subsection are—
(a) the members who are employees in respect of whom direct payment arrangements exist, and 
(b) where the scheme is a stakeholder pension scheme, any other members.

(3) In this section– “stakeholder pension scheme” means a personal pension scheme which is or has been 
registered under section 2 of the Welfare Reform and Pensions Act 1999 (c. 30) 
(register of stakeholder schemes); “work-based pension scheme” means–
(a) an occupational pension scheme,
(b) a personal pension scheme where direct payment arrangements exist in
respect of one or more members of the scheme who are employees, or
(c) a stakeholder pension scheme.

Section 70 – Duty to report breaches of the law

(1) Subsection (2) imposes a reporting requirement on the following persons–
(a) a trustee or manager of an occupational or personal pension scheme; 
(aa) a member of the pension board of a public service pension scheme; 
(b) a person who is otherwise involved in the administration of an occupational or personal pension scheme; 
(c) the employer in relation to an occupational pension scheme; 
(d) a professional adviser in relation to such a scheme; 
(e) a person who is otherwise involved in advising the trustees or managers of an occupational or personal pension scheme in relation to the scheme.
(f) a scheme strategist or scheme funder of a Master Trust scheme within the meaning of Part 1 of the Pension Schemes Act 2017 (see section 39 of that Act).

(2) Where the person has reasonable cause to believe that–
(c) a duty which is relevant to the administration of the scheme in question, and is imposed by or by virtue of an enactment or rule of law, has not been or is not being complied with, and 
(d) the failure to comply is likely to be of material significance to the Regulator in the exercise of any of its functions, he must give a written report of the matter to the Regulator as soon as reasonably practicable.

(3) No duty to which a person is subject is to be regarded as contravened merely because of any information or opinion contained in a written report under this section. This is subject to section 311 (protected items).

(4) Section 10 of the Pensions Act 1995 (c. 26) (civil penalties) applies to any person who, without reasonable excuse, fails to comply with an obligation imposed on him by this section.

Section 100 – Duty to have regard to the interests of members etc

(1) The Regulator must have regard to the matters mentioned in subsection (2)–
(a) when determining whether to exercise a regulatory function–
(i) in a case where the requirements of the standard or special procedure apply, or (ii) on a review under section 99, and
(b) when exercising the regulatory function in question.

(2) Those matters are–
(a) the interests of the generality of the members of the scheme to which the exercise of the function relates, and 
(b) the interests of such persons as appear to the Regulator to be directly affected by the exercise.

PA 08

Section 3 – Automatic enrolment

(1) This section applies to a jobholder –
(a) who is aged at least 22,
(b) who has not reached pensionable age, and
(c) to whom earnings of more than £10,000 are payable by the employer in the relevant pay reference period (see section 15).

(2) The employer must make prescribed arrangements by which the jobholder becomes an active member of an automatic enrolment scheme with effect from the automatic enrolment date.

(3) Subsection (2) does not apply if the jobholder was an active member of a qualifying scheme on the automatic enrolment date.

(4) Subsection (2) does not apply if, within the prescribed period before the automatic enrolment date, the jobholder ceased to be an active member of a qualifying scheme because of any action or omission by the jobholder.

(5) For the purposes of arrangements under subsection (2) regulations may require information to be provided to any person by the employer or–
(a) where the arrangements relate to an occupational pension scheme, the trustees or managers of the scheme; 
(b) where the arrangements relate to a personal pension scheme, the provider of the scheme.

(6) For the purposes of arrangements made under subsection (2) in relation to a personal pension scheme, regulations may deem an agreement to exist (subject to section 8) between the jobholder and the provider of the scheme for the jobholder to be an active member of the scheme on terms and conditions determined in accordance with the regulations.

(6A) In this section “earnings” has the meaning given in section 13(3).

(6B) In the case of a pay reference period of less or more than 12 months, subsection (1) applies as if the amount in paragraph (c) were proportionately less or more.

(7) The automatic enrolment date, in relation to any person, is the first day on which this section applies to the person as a jobholder of the employer. This is subject to section 4.

(8) In this Part as it applies in the case of any jobholder, references to an automatic enrolment scheme are references to a pension scheme which is an automatic enrolment scheme in relation to that jobholder (see section 17).

Section 4 – Postponement or disapplication of automatic enrolment

(1) Where–
(a) an employer (E) gives to a person employed by E on E's staging date ( “the worker”) notice that E intends to defer automatic enrolment for the worker until a date specified in the notice ( “the deferral date” ), and 
(b) any prescribed requirements in relation to the notice are met, the worker's automatic enrolment date is the deferral date if on that date section 3 applies to the worker as a jobholder of E; if not, subsection (4) applies.

(2) Where–
(a) a person ( “the worker” ) begins to be employed by an employer (E) after E's staging date, 
(b) E gives the worker notice that E intends to defer automatic enrolment until a date specified in the notice ( “the deferral date” ), and 
(c) any prescribed requirements in relation to the notice are met, the worker's automatic enrolment date is the deferral date if on that date section 3 applies to the worker as a jobholder of E; if not, subsection (4) applies.

(3) Where–
(a) a person ( “the worker” ) employed by an employer (E) becomes, after E's staging date, a jobholder to whom section 3 applies,
(b) E gives the worker notice that E intends to defer automatic enrolment until a date specified in the notice ( “the deferral date” ), and 
(c) any prescribed requirements in relation to the notice are met, the worker's automatic enrolment date is the deferral date if on that date section 3 applies to the worker as a jobholder of E; if not, subsection (4) applies.

(4) Where this subsection applies, section 3(2) does not apply in relation to any employment of the worker by E in the period beginning with the starting day and ending with the deferral date.

(5) A notice under this section may be given on or before the starting day or within a prescribed period after that day.

(6) The deferral date may be any date in the period of three months after the starting day.

(7) An employer who gives a worker a notice under subsection (1) or (2) may not give the worker a notice under subsection (3) in relation to any occasion on or before the deferral date specified in the notice on which the worker becomes a jobholder to whom section 3 applies.

(8) In this section–“staging date” , in relation to an employer of a particular description, means the date prescribed under section 12 in relation to employers of that description; 
“starting day” means–
(a) E's staging date, in the case of a notice under subsection (1);
(b) the day on which the worker begins to be employed by E, in the case of a notice under subsection (2);
(c) the day on which the worker becomes a jobholder to whom section 3 applies, in the case of a notice under subsection (3).

Section 7 – Jobholder’s right to opt in

(1) This section applies to a jobholder who is not an active member of a qualifying scheme.

(2) But it does not apply at a time when–
(a) arrangements are required to be made under section 3 or 5 in respect of the jobholder

(3) The jobholder may by notice require the employer to arrange for the jobholder to become an active member of an automatic enrolment scheme.

(4) The Secretary of State may by regulations make provision–
(a) about the form and content of the notice; 
(b) about the arrangements that the employer is required to make; 
(c) for determining the date with effect from which the jobholder is to become an active member under the arrangements.

(5) For the purposes of arrangements under subsection (3) regulations may require information to be provided to any person by the employer or–
(a) where the arrangements relate to an occupational pension scheme, the trustees or managers of the scheme; 
(b) where the arrangements relate to a personal pension scheme, the provider of the scheme.

(6) For the purposes of arrangements made under subsection (3) in relation to a personal pension scheme, regulations may deem an agreement to exist (subject to section 8) between the jobholder and the provider of the scheme for the jobholder to be an active member of the scheme on terms and conditions determined in accordance with the regulations.

(7) Subsections (8) and (9) apply where a jobholder becomes an active member of an automatic enrolment scheme in pursuance of a notice under this section and, within the period of 12 months beginning with the day on which that notice was given–
(a) ceases to be an active member of that scheme, and 
(b) gives the employer a further notice under this section.

(8) The further notice does not have effect to require the employer to arrange for the jobholder to become an active member of an automatic enrolment scheme.

(9) But any arrangements the employer makes for the jobholder to become, within that period, an active member of such a scheme must be made in accordance with regulations under this section. 

Section 9 – Workers without qualifying earnings

(1) This section applies to a worker –
(a) to whom paragraphs (a) and (b) of section 1(1) apply (working in Great Britain and aged between 16 and 75), 
(b) to whom paragraph (c) of section 1(1) does not apply (qualifying earnings), and 
(c) who is not an active member of a pension scheme that satisfies the requirements of this section.

(2) The worker may by notice require the employer to arrange for the worker to become an active member of a pension scheme that satisfies the requirements of this section.

(3) The Secretary of State may by regulations make provision–
(a) about the form and content of the notice; 
(b) about the arrangements that the employer is required to make; 
(c) for determining the date with effect from which the worker is (subject to compliance with any requirements of the scheme) to become an active member under the arrangements.

(4) Subsections (5) and (6) apply where a worker becomes an active member of a pension scheme in pursuance of a notice under this section and, within the period of 12 months 
beginning with the day on which that notice was given–
(a) ceases to be an active member of that scheme because of any action or omission by the worker, and 
(b) gives the employer a further notice under this section.

(5) The further notice does not have effect to require the employer to arrange for the worker to become an active member of a pension scheme.

(6) But any arrangements the employer makes for the worker to become, within that period, an active member of a pension scheme that satisfies the requirements of this section must be made in accordance with regulations under this section.

(7) A pension scheme satisfies the requirements of this section if–
(a) it is registered under Chapter 2 of Part 4 of the Finance Act 2004 (c. 12), and 
(b) in the case of a personal pension scheme, there are, in relation to the worker concerned, direct payment arrangements (within the meaning of section 111A of the Pension Schemes Act 1993 (c. 48)) between the worker and the employer.

Master Trusts Regulations

Regulation 14 - Significant events: notifying the Regulator

The following are significant events which must be notified to the Regulator under section 16 of the Act (duty to notify Regulator)–
(a) a change or addition to the persons involved with the scheme in the capacities listed in section 7(2) or (3) of the Act (fit and proper persons requirement), unless 
the change or addition is a triggering event; 
(b) an individual who is involved with the scheme in a capacity listed in section 7(2) or (3) of the Act, or whose involvement in the running of the scheme has been suspended while the individual's appointment is being considered–
(i) is convicted of an offence; 
(ii) enters bankruptcy; 
(iii) has a County Court judgment registered, or in Scotland a decree of the Sheriff Court issued, against him or her; 
(iv) is sanctioned by a regulator other than the Regulator; 
(v) is disqualified as a company director; 
(vi) has been the subject of an adverse judgment or has reached a settlement in civil proceedings, particularly in connection with investment or other financial business, misconduct, fraud or the formation or management of a body corporate;
(vii) has contravened any of the requirements or standards of a regulator, including the Regulator; 
(viii) has a change of circumstances, through ill health or otherwise, which materially impairs the individual's ability to operate in a capacity listed in section 7(2) or (3);
(ix) has any other change of circumstances which the person required to give notice considers likely to affect the Regulator's assessment under section 7 of the Act of whether the individual is a fit and proper person;
(c) a significant change to the statement of investment principles;
(d) a change that requires revision of the business plan under section 9(4) of the Act;
(e) a failure to meet a key milestone, target, estimate or assumption in the business plan;
(f) the scheme is unable or unlikely to meet its liabilities on demand;
(g) the scheme is unable or unlikely to meet the level of assets or liquidity agreed with the Regulator and set out in the business plan;
(h) except where regulation 28(1) applies to a scheme, a change to the financial reporting period to be used in the accounts of the scheme or scheme funder;
(i) a change in the financial information which a scheme funder has supplied to the Regulator with an application for exemption under regulation 8(1);
(j) a failure of the systems or processes used in running the scheme which has a significant adverse effect on the security or quality of data or on service delivery; 
(k) a significant change to the systems and processes used in running the scheme, or in any person responsible for delivering key services to the scheme; 
(l) an investigation of the scheme, or of a person involved in the scheme, by a regulator or other competent authority inside or outside the United Kingdom.

The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010

Regulation 2 – Enrolment information

In these Regulations “enrolment information” means the information described in paragraphs 1–15, and 24 of Schedule 2. Regulation 7 

(1) Subject to paragraph (2), for the purposes of the arrangements under section 3(2) of the Act, at any time before the end of a period of six weeks beginning with the automatic enrolment date, the employer must give–
(a) the jobholder the enrolment information in writing; and 
(b) the trustees or managers of the occupational pension scheme or the personal pension scheme provider the jobholder information in writing.

(2) The requirement in paragraph (1)(b) does not apply in relation to the information specified in regulation 3(1)(g), (h), (i), (j) or (k), where the trustees or managers of the occupational pension scheme notify, or the personal pension scheme provider notifies, the employer that they do not require that piece of information for the purposes of arrangements under section 3(2) of the Act.

(3) Where the information referred to in regulation 3(1)(f) is not available to the employer on the automatic enrolment date, the employer must give the trustees or managers of the occupational pension scheme or the personal pension scheme provider that information within six weeks from the date on which the employer receives it.

Regulation 21 – Information to be given to workers

At any time before the end of the period of six weeks beginning with the date on which section 7 (jobholder's right to opt in) or section 9 (workers without qualifying earnings) of the Act, as the case may be, first applies to a worker, the employer must give–
(a) the jobholder to whom section 7 applies, in writing, the information described in–
(i) paragraphs 16 and 24 of Schedule 2; or 
(ii) paragraphs 18 and 24 of Schedule 2; and 
(b) the worker to whom section 9 applies, in writing, the information described in–
(i) paragraphs 17 and 24 of Schedule 2; or 
(ii) paragraphs 18 and 24 of Schedule 2.

Regulation 24 – Prescribed requirements for the purposes of section 4(1), (2) and (3) of the Act

(1) A notice under section 4(1), (2) or (3) of the Act (postponement or disapplication of automatic enrolment) given by an employer to all workers must be in writing and, subject to paragraphs (1A) and (1B), include the information described in paragraphs 18, 20, 21 and 24 of Schedule 2;

(1A) In the case of workers who are jobholders and who are not active members of a qualifying scheme, the notice referred to in paragraph (1) must include the information described in either paragraph 16 or 18 and in paragraphs 20, 21 and 24; and

(1B) In the case of workers who are not jobholders and are not active members of a qualifying scheme, the notice referred to in paragraph (1) must include the information described in either paragraph 17 or 18 and in paragraphs 20, 21 and 24.

(3) For the purposes of section 4(5) of the Act, the prescribed period is the period of six weeks beginning with the day after the starting day.

Schedule 2 – Information

1 A statement that the jobholder has been, or will be, enrolled into a pension scheme.

2 The jobholder's automatic enrolment date, automatic re-enrolment date or enrolment date, as the case may be or, for a jobholder to whom regulation 28 or 29 applies, the day or date mentioned in regulation 6 as modified by regulation 28 or 29, as the case may be.

4 

(1) The value of any contributions payable to the scheme by the employer and the jobholder in any applicable pay reference period.

(2) The information to be given to the jobholder under sub-paragraph (1) includes information on any change in the value of any contributions payable to the scheme by the employer or jobholder in any applicable pay reference period which will occur as the result of any changes to contributions brought about by the transitional periods for money purchase and personal pension schemes under section 29 of the Act (transitional periods for money purchase and personal pension schemes). 

(3) The “value” of contributions may be expressed as a fixed amount or a percentage of any qualifying earnings or pensionable pay due to the jobholder in any applicable pay reference period.

5 A statement that any contributions payable to the scheme by the jobholder have been or will be deducted from any qualifying earnings or pensionable pay due to the jobholder.

6 Confirmation as to whether tax relief is or will be given on employee contributions.

8 A statement that the jobholder has the right to opt out of the scheme during the opt out period.

9 A statement indicating the start and end dates of the opt out period applicable to the jobholder if that information is known to the employer but if not, a statement that the opt out period is the period determined in accordance with regulation 9(2) or (3) of the Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010.

10 Where the opt out notice may be obtained.

11 A statement that opting out means that the jobholder will be treated for all purposes as not having become an active member of the scheme on that occasion.

12 A statement that after a valid opt out notice is given to the employer in accordance with regulation 9(2) or (3) any contributions paid by the jobholder will be refunded to the jobholder by the employer.

13 A statement that where the jobholder opts out the jobholder may opt in, in which case the employer will be required to arrange for that jobholder to become an active member of an automatic enrolment scheme once in any 12 month period.

14 A statement that, after the opt out period, the jobholder may cease to make contributions in accordance with scheme rules.

15 A statement that a jobholder who opts out or who ceases active membership of the scheme will normally be automatically re-enrolled into an automatic enrolment scheme by the employer in accordance with regulations made under section 5 of the Act (automatic re-enrolment).

16 A statement that the jobholder may, by giving written notice to the employer, require the employer to make arrangements for the jobholder to become an active member of an automatic enrolment scheme and that the jobholder will be entitled to employer's contributions.

17 A statement that the worker may, where they are working or ordinarily work in Great Britain and are aged at least 16 and under 75 and are not a member of a pension scheme that satisfies the requirements of section 9 of the Act, by giving written notice to the employer, require the employer to make arrangements for the worker to become an active member of such a pension scheme.

18 A statement that by giving written notice to the employer, the worker who is aged at least 16 and under 75 and–
(a) who earns more than the lower qualifying earnings limit as specified in section 13(1)(a) of the Act (and the amount must be specified in the statement) and is not an active member of a qualifying scheme, may require the employer to arrange for that worker to become an active member of an automatic enrolment scheme and will be entitled to employer's contributions; or
(b) who earns no more than the lower qualifying earnings limit as specified in section 13(1)(a) of the Act (and the amount must be specified in the statement) and is not a member of a pension scheme that satisfies the requirements of section 9 of the Act, may require the employer to arrange for that worker to become an active member of such a pension scheme but will not be entitled to employer's contributions. 20 A statement that the employer has deferred automatic enrolment until the deferral date (and the date must be given).

21 A statement that the employer will automatically enrol the worker into an automatic enrolment scheme if, on the deferral date, the worker is aged 22 or more but less than state pension age, is working or ordinarily works in Great Britain, earnings of more than the amount specified in section 3(1)(c) of the Act (and the amount must be given) are payable to the worker and the worker is not already an active member of a qualifying scheme.

22 A statement that the employer intends to defer automatic enrolment in respect of that jobholder until the end of the transitional period for defined benefit and hybrid schemes.

24 A statement that a written notice from the worker must be signed by the worker or, if it is given by means of an electronic communication, must include a statement that the worker personally submitted the notice.

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