Question to the Department for Work and Pensions:

To ask Her Majesty's Government whether the withdrawal of credit insurance to a company sponsoring a pension fund with a large deficit requires approval by the Pensions Regulator.

The Pensions Regulator does not have jurisdiction over corporate business transactions, such as the withdrawal of credit insurance, and does not have the power to require insurance companies to seek approval before withdrawing insurance cover.

The Pensions Regulator operates a voluntary clearance procedure to those who are considering transactions involving companies with defined benefit schemes. If clearance is not applied for and granted, the Regulator may exercise its anti-avoidance powers, if it considers that the transaction was aimed at avoiding a debt to the pension scheme. These powers can be applied up to six years after a transaction has taken place.

Employers sponsoring defined benefit pension schemes are also required to notify the Regulator of certain prescribed events. These do not include the withdrawal of credit insurance but should the withdrawal of such insurance trigger a prescribed event, including insolvency, then the employer would be required to notify the Pensions Regulator.

Defined benefit pension schemes also go through a valuation process every three years (tri-annual evaluation), comparing assets against liabilities, and the withdrawal of credit insurance might be identified by the Regulator as part of this process.