The Pensions Regulator (TPR) has settled its dispute with the parent company of the Bonas Group Pension Scheme’s UK sponsoring employer for a fraction of the amount originally claimed.

In April 2010, the Determinations Panel of TPR recommended that a contribution notice (CN) should be issued for just over £5 million against Michel Van de Wiele NV (VDW), the Belgian parent company of Bonas UK Ltd. Bonas was the sponsoring employer of the scheme until being sold under a pre-pack administration, thereby causing the scheme to enter the Pension Protection Fund.

In the event, the CN was not issued as VDW applied to the Upper Tribunal and asked for the determination to be struck out. The strike-out application was unsuccessful, but in giving judgment, Mr Justice Warren suggested that the amount specified in the proposed CN was excessive. The amount specified should simply compensate the scheme for the detriment suffered following an act or failure to act that prevented the trustees from recovering an employer debt.

On 9 June 2011, TPR announced it had settled its dispute with VDW and that it had issued a CN in the amount of £60,000. TPR’s report confirms the compromise but largely rejects the tribunal’s analysis of the amount that should generally be specified in a CN. In particular, TPR’s report suggests that this is not how TPR intends to approach other current or future cases, and claims that the judge’s comments reflected the particular facts of the Bonas case and that they were not intended “…to restrict, in all cases, the amount of a CN to the detriment suffered by a pension scheme which could be demonstrated to be caused by the specified act or failure to act”.

However, our view is that even though Warren J’s comments on quantum were obiter dicta, they are a clear indication that the value of any future CN should be proportionate to the amount of any financial detriment suffered by the scheme. Any monies due under a CN should be compensatory and not punitive in nature.