A number of very high profile cases are pushing the government to make wilful or reckless behaviour in the handling of company pension funds a criminal offence in the UK, according to a government white paper that announced new proposals to ‘crack down’ on unscrupulous bosses says Chris Wilkinson of Expert HR Solutions.
Is the Protecting Defined Benefit Pension Schemes White Paper a “giant step in the right direction” as some commentators have asserted or a giant step towards criminalising well intentioned employers? It certainly looks to provide The Pensions Regulator (TPR) with tougher, more active powers to intervene when employers evade their obligations.
Measures outlined in the white paper include giving TPR the power to punish employers that deliberately put their pension schemes at risk by introducing punitive fines and improving the effectiveness and efficiency of their existing powers which protect member benefits and hold employers to account.
The government said it would legislate to introduce a criminal offence that will punish those found to have committed wilful or grossly reckless behaviour in relation to a pension scheme. It would also build on existing processes to support the disqualification of company directors.
A consultation will be carried out over the coming months to ensure this is delivered effectively. As a policy document, the government’s white paper proposals for future legislation are still subject to change.
The planned improvements to TPR funding, information-gathering and anti-avoidance powers will enable them to be clearer about what we expect from employers in relation to scheme funding, and tougher where a scheme is not getting the funding it needs.”
Kate Smith, head of pensions at Aegon, said the measures to protect against a “small minority” of unscrupulous employers were a “giant step in the right direction”. “It is sending out a loud and clear message that reckless behaviour from employers that puts defined benefit schemes at risk will no longer be tolerated. Those employers found guilty of deliberately putting their defined benefit schemes at risk can be heavily fined and risk a criminal record,” she said.
However, other experts felt the measures could be slow to introduce and difficult to enforce. Steve Webb, director of policy at Royal London, said the new laws could be reduced to “gesture legislation”.
“With an Act of parliament likely to have to wait until 2019-20 and further detailed regulations needed after that, it could be a long time before today’s paper has any practical impact.”
Chris urges all Companies to take advantage of the likely delay in legislation to ensure they have a Pension scheme in place and that it is properly funded. He concludes, if you want advice on current legislation why not call us on 01202 611033.