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Section 67: The reporting requirement
Section 67 of the Pensions Act 1995 applies whenever a power to modify an occupational pension scheme is exercised to make a change (known as a “regulated modification”) which would or might adversely affect a member’s subsisting rights.
There are two types of “regulated modification”. These are “protected modifications” and “detrimental modifications”. Each type of modification requires certain conditions to be met before the modification can be made. For further details, see Section 67: Basics.
Regardless of whether the change proposed is a protected or detrimental modification, both the trustee approval requirement and the reporting requirement must be satisfied. To fulfil the reporting requirement the trustees must:
- notify each affected member whose informed consent has been sought; and/or
- “take all reasonable steps” to notify each affected member where the actuarial equivalence route is used;
that they have determined to exercise the power of modification (or consented to the change as the case may be). The trustee must notify the affected members (or take reasonable steps to do so if the actuarial equivalence requirements apply) within a “reasonable period” of taking the decision to make/give their consent to the change. The Pensions Regulator’s code of practice states that members should be notified as soon as reasonably practicable but specifies that trustees should aim to notify those affected within one month of making the decision.