NEWS   |    February 19, 2021

Partner Jane Kola comments in Pensions Expert on the implications of the Pension Schemes Act

Pensions Expert has reported a number of times on fears held by some industry experts about the expanded definition of criminal liability and the increased powers given to the Pensions Regulator.

LCP warned in January that, as it stands, the Pension Schemes Act has the potential to ensnare all manner of legitimate business activity within its definition of criminal liability while in a Pensions Expert podcast, partner Jane Kola suggested this could result in a raft of avoidable insolvencies.

A recent survey carried out as part of a webinar has laid bare a deep divide in the industry over powers afforded by the Pension Schemes Act. Forty-three per cent of the survey’s 119 respondents said that they had no concerns in relation to TPR’s new powers. Forty per cent reported being mildly concerned, while only 17 per cent were “very or extremely” concerned.

Jane commented the industry should not overstate the likely impact of TPR’s as-yet-unissued guidance. In relation to this and the survey’s findings, she added:

“Clients are simply unaware of the breadth of the new powers and how they link to TPR’s beefed-up powers, the risk of higher fines and ultimately the criminal offences”

“It has been publicised by the authorities as targeting unscrupulous employers taking advantage of or mistreating pension schemes. If you don’t think you are an unscrupulous employer, then you would think you have nothing to fear. That simply isn’t true: employers, trustees and advisers can be caught by this legislation even if making relatively routine decisions.”

“Guidance is not law and so does not offer any meaningful protection. Of course, if nothing goes wrong there will be no issue. If the scheme becomes fully funded of its own accord and full member benefits are secured with insurance, there is nothing to prosecute.”

“But what if the sponsor begins to fail or the investment strategy doesn’t work out? The real issue is that the wording is so wide it is difficult to determine whether someone would be caught by the new provisions or not — that’s not fair as people cannot conduct their affairs and be certain that they are safe from the risk of prosecution.”

Read Jane’s comments in Pensions Expert.

The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. Arc Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.

Related News