The Pensions Regulator (TPR) has today outlined how it plans to use new criminal powers where employers attempt to dodge their pension promises.
Two new criminal offences – avoidance of employer debt and conduct risking accrued scheme benefits – come into force on 1 October 2021.
Those involved could also face financial penalties of up to £1 million.
TPR emphasises only the most “serious examples of intentional or reckless” conduct will result in criminal sanctions.
Tom Selby, head of retirement policy at AJ Bell, comments: “The BHS pensions scandal exposed holes in the regulatory regime designed to protect the interests of defined benefit (DB) schemes.
“In particular, it appeared far too easy for employers to abandon their responsibilities to members, with the Pension Protection Fund at risk of being left to pick up the bill.
“In response, new criminal powers have been handed to The Pensions Regulator via the Pension Schemes Act 2021, meaning employers who ‘intentionally or recklessly’ dodge their pension responsibilities could face prosecution and fines of up to £1 million.
“Ultimately the regulator itself acknowledges that it may be up to the Courts to determine whether or not an employer is ‘intentional or reckless’ in its actions in relation to pension scheme members.
“What’s more, TPR goes out of its way to emphasise that these powers will only be used in the most serious cases, no doubt conscious of the fact it does not want to be seen as a barrier to legitimate corporate activity.
“While many will argue this is an example of the Government acting long after the horse has bolted, the very existence of these powers should act as a significant deterrent to poor behaviour and help ensure pension scheme members are not left high-and-dry as a result of negligence by company bosses.”