The Pensions Regulator Enforcement Policies Consultation: Further Clarity for Employers and Trustees
The introduction of The Pension Schemes Act 2021 has prompted much debate about the Pensions Regulator’s (TPR) new powers to issue criminal proceedings and hefty fines of up to £1m for certain conduct relating to defined benefit schemes. Many in the industry have been concerned about how these powers will be used and, in particular, what route TPR will take when it has more than one enforcement option available.
The consultation notes that TPR may use a combination of measures, including statutory notices, financial penalties and criminal proceedings. Statutory notices will aim to secure an action, outcome or remedy, while fines and criminal proceedings are to punish more serious behavior.
One thing that is clear from the consultation is that criminal proceedings will generally be issued instead of statutory notices or financial penalties if there are aggravating factors such as previous breaches or dishonesty or for serious cases of deliberate and wilful conduct. This draft policy will be reassuring to those concerned that criminal proceedings were going to be issued too readily.
The consultation also sets out TPR’s policy on financial penalties. In short, TPR will look at two things, (i) the “culpability” of those involved and (ii) the level of harm to the scheme and saver outcomes. If culpability and harm to the scheme are both judged to be low, fines are unlikely to exceed £400,000. However, if there is high harm and high culpability, in the most serious cases, TPR may issues fines of up to £1m.
It’s important to note that these policies have not yet been finalised and are currently in draft form. The consultation will be open until 22 December. Feedback will be considered before the final policy is published in early 2022.
Read Rhiannon’s article in The Legal Diary.
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.