UK - The Pensions Regulator (TPR) has issued its first contribution notice, ordering Michel Van De Wiele Group NV (VDW) to pay £5m (€6.2m) into the Bonas Group Pension Scheme.

The contribution notice is subject to appeal, although this is the first time  TPR has published a contribution notice. Cases are usually settled and contributions  made without formal enforcement action.

TPR’s determination panel found that VDW, the parent company of the textile machinery business Bonas, “had retained the Bonas business while avoiding the pension liability, by placing Bonas into a pre-pack insolvency, and had not engaged openly with pension trustees or the regulator”.

The Bonas Group Pension scheme entered into the PPF assessment period in January 2007 and formally transferred to the PPF in November 2008. The regulator highlighted that it primarily takes an approach of education and enablement and only uses enforcement action where necessary to secure outcomes for members and the PPF.

However the contribution notice was issued by the determination panel on 14 May 2010 giving VDW 28 days to decide if it wished to appeal to the upper tribunal, which the company has subsequently decided to do.

Bill Galvin, acting chief executive at TPR, said: “Much of the regulator’s effort to secure funding to schemes occurs through a process of discussion and negotiation, working with trustees and pension scheme sponsors. But where attempts are made to avoid companies’ pension obligations we will use our moral hazard powers to protect members’ benefits and the Pension Protection Fund (PPF).”