Rentokil Initial Pension Trustee Limited has been fined £25,000 by The Pensions Regulator (TPR), for failing to complete two valuations for its defined benefit (DB) pension scheme, which has approximately 140 members.
This is part of TPR's 'clearer, quicker, tougher' approach, initiated in April 2017, which has seen it issue nine Warning Notices for similar late valuations. Seven of these schemes have complied and submitted valuations after receiving either the initial Warning Notice, or subsequent Improvement Notices and Third Party Notices. One case is still ongoing.
DB scheme trustees are required to complete valuations every three years, and to submit a recovery plan and schedule of contributions to TPR if the scheme is in deficit. Rentokil Initial Pension Trustee Limited failed to complete its 2012 and 2015 valuations of the Initial Hospital Service Limited No.1 Pension Scheme by the respective deadlines of July 2013 and July 2016.
The trustee stated that the reason for this delay was a planned merger with a separate scheme, run by sponsoring employer Rentokil Initial Plc. However, TPR repeatedly advised that this was not a valid reason for failing to comply with the statutory requirements.
The proposed merger failed to happen, and the valuations were not submitted by the end of 2017, when TPR decided to take formal action.
TPR's Determinations Panel (DP), which is independent of TPR's case teams and investigation process, with separately appointed membership and separate legal support, upheld the recommendation that the trustee should be issues with a £25,000 fine. This fine comes under section 10 of the Pensions Act 1995, cannot be taken out of scheme funds, and reflects the trustee's failure to take all reasonable steps to complete the valuations.
The DP set out its findings in a determination notice, published on 11 July 2018. The trustee did not dispute these findings, and the fine has now been paid.
In April 2018, TPR also issued an Improvement Notice to the trustee and a Third Party Notice to the sponsoring employer, under sections 13 and 14 of the Pensions Act 2004. These required both outstanding valuations to be submitted by the end of May. Both valuations have now been received.
Nicola Parish, executive director of frontline regulation at TPR, said: “Agreeing a triennial valuation is a key priority for the trustee of a scheme and its sponsoring employer. It allows us to check the health of a scheme and its ability to provide members with their expected retirement benefits.
“We are monitoring valuation due dates more regularly, and this fine shows we will take tough action sooner to put things right where breaches occur.
“The behaviours in this case were so severe that, not only did we issue Improvement Notices, we also recommended to the Determinations Panel that a fine should be imposed at a level that would be likely to improve behaviours in the future and be an effective deterrent for other trustees. We are pleased the Determinations Panel agreed with our approach.”
