Pensions regulator consults on new criminal sanctions policy

The Pensions Regulator (TPR) has published a consultation on how it will use its new criminal powers to investigate and prosecute those who avoid employer debts to pension schemes or put savers’ pensions at risk

TPR has published the draft policy and a consultation on how it plans to use the criminal powers set out in the Pension Schemes Act 2021.

The Act introduces two new criminal offences: the offence of avoidance of employer debt, and the offence of conduct risking accrued scheme benefits. The offences are likely to be enforced from autumn 2021.

David Fairs, TPR’s executive director of regulatory policy, said: ‘Our new criminal offence powers are part of a strong package of measures which enhance our existing avoidance powers, supporting our objectives to protect pension savers.

‘The intent of the new criminal offences is not to change commercial norms or accepted standards of corporate behaviour. Rather it is to tackle the more serious examples of intentional or reckless conduct that puts members’ savings at risk; and strengthen the deterrent and punishment for that behaviour. Our policy is consistent with this intent.

‘It is important our approach is clear and understood, and so I call on industry to take part in the consultation as we finalise our policy.’

This is the first in a series of consultations TPR will be publishing as it takes forward the government’s plans outlined in the Pension Schemes Act 2021.

The two offences outlined in the draft policy will be committed if someone acts, or fails to act, with the relevant intention and does not have a reasonable explanation for their behaviour. The onus will be on the prosecution to prove that the accused did not have a reasonable excuse.

In the key area of what amounts to a reasonable excuse, the regulator said that the policy sets out factors which we think should be significant in answering that question.

Fairs added: ‘We appreciate the industry’s interest in our intended approach to investigating and prosecuting people under these new offences and the desire for clarity. The policy discusses in detail the points of similarity and differences with our existing anti-avoidance powers and provides examples of the types of behaviour that could fall within the scope of the new offences.’

Peter Murphy, partner at Sackers, said: ‘Reassuringly, TPR intends its approach to be guided by statements already made in Parliament, that the new offences are not intended to give rise to a fundamental change in normal commercial practice or accepted standards of corporate behaviour in the UK. They are very much targeted at the more serious intentional or reckless conduct that is already within the scope of its existing anti-avoidance powers, such as contribution notices.

‘The examples of behaviour set out in the draft policy help to reinforce this intended approach. But they provide little detail, and judicial consideration of the existing anti-avoidance powers is limited. So while it might allay fears around the more incidental consequences on affected pension schemes, there will still be a lot of shades of grey and I expect the new criminal offences will result in more cautious corporate behaviour where the legal position is not so clear.’

In the case of the offence of avoidance of employer debt, the offence can apply to anyone who:

  • prevents the recovery of the whole or any part of a debt due to the scheme under section 75 of the Pensions Act 1995;
  • prevents such a debt becoming due;
  • compromises or otherwise settles such a debt; or
  • reduces the amount of such debt which would otherwise become due.

In the case of the offence of conduct risking accrued scheme benefits, the offence can apply to anyone who does an act or engages in a course of conduct that detrimentally and materially affects the likelihood of members receiving their accrued scheme benefits.

The closing date for comment on the TPR consultation is 22 April 2020. TPR will review all consultation responses and make any appropriate changes before publishing the final policy later this year.

Consultation on TPR approach to the investigation and prosecution of the new criminal offences

 

 

 

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