17th May 2018 Pensions Regulator to toughen up following Carillion failure
The publication yesterday of the joint Business and Energy & Industrial Strategy and Work & Pensions Committees’ report on the demise of Carillion is set to shake things up at The Pension Regulator (TPR), which has been criticised in no uncertain terms across the 100 plus pages of the report.
Carillion collapsed in January under the weight of a £1.5bn debt pile. According to the paper, TPR failed in is statutory objectives to reduce the risk of pension schemes falling into the Pension Protection Fund (PPF), protecting members’ benefits – indeed the directors treated them “with contempt”. The trustees of Carillion’s scheme had repeatedly asked TPR to intervene and, whilst there were numerous meetings held with both trustees and the company, none actually resulted in any regulatory action being instigated against Carillion.
Crucially, TPR is accused in the report of being a ‘paper tiger’. The solution to this is for it to be “clearer, quicker and tougher” as outlined in the Department of Work and Pensions White Paper released in March and the recently published Corporate Plan for 2018-2021. But what does this actually mean in practice? Well it seems that TPR is likely to be given the power to issue larger fines, and in more circumstances. This is an east power to add to existing legislation, and fines are likely to be perceived as a greater threat than the use of its more complicated (and time consuming) anti-avoidance powers.
The report pointed out the evidence that in 13 years, TPR had only issued three Warning Notices about setting employer contributions, none of which ended up in this power being used. Following the report and White Paper, it is possible that more clearance applications will be made (reversing the steep decline in seeking clearance since 2005/6). This could ultimately mean that the one-third of TPR’s resources allocated to frontline regulation for 2018/19 will end up very stretched.
This article was published in Acquisitions Daily
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