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TPR issues first Chair's statement fine

Ref: PN16-28
Wednesday 29 June 2016

The Pensions Regulator (TPR) has warned the trustees of defined contribution (DC) schemes that they will be fined for failing to comply with new pensions law.

TPR has called on trustees to meet the new statutory requirement to prepare an annual governance statement signed by the chair of trustees, which was introduced last year, or face a mandatory fine of up to £2,000.

The warning comes as TPR has published a report on the first fine imposed on a trustee of a DC scheme for failing to meet this requirement.

The trustee of Abbey Manor Group Pension Scheme received the minimum mandatory £500 fine after the trustee promptly complied with their legal duty to notify TPR of the breach, and quickly took action to prepare the required statement.

TPR has issued a regulatory intervention report (PDF, 80kb, 3 pages) into the case.

Andrew Warwick-Thompson, Executive Director for Regulatory Policy at TPR, said: “This case demonstrates that we must comply with the law and must impose a penalty where trustees fail to prepare an annual governance statement signed by the chair of trustees.

“In this particular case, the trustees did the right thing by promptly complying with their duty to notify us of the breach, and quickly taking action to prepare the required statement. A fine of up to £2,000 could be imposed for such a breach.

“We are supporting trustees in numerous ways, including new web guidance and news-by-email to help them understand how to complete the new scheme return in order to demonstrate they are meeting new governance standards.

“However, schemes should be aware that this type of breach will result in a fine and we hope that our report will act as a reminder and a deterrent for other schemes.”

In a change from last year, trustees of schemes providing DC benefits are now required to provide information in their scheme return about how they comply with certain requirements of the 2015 legislation, including identifying the chair of trustees and confirming they have prepared a governance statement signed by the chair.

TPR is advising trustees about a number of changes to the scheme return so they can plan in advance. Scheme return notices requiring the revised scheme return to be provided to TPR will be sent out from July this year.

Trustees are required to notify TPR of breaches via the scheme return and TPR will take action if the scheme return is not completed. The current number of warning notices issued for the failure to submit a scheme return by the due date stands at 22.

Mr Warwick-Thompson added: “We will act where trustees demonstrate that they are not meeting even the basic 'hygiene' duties we expect.”

Editor's notes

  1. On 23 March 2016, TPR received a breach of law report from the trustee of Abbey Manor Group Pension Scheme notifying that the trustee had failed to comply with regulation 23 of the Occupational Pension Schemes (Schemes Administration) Regulations 1996. This is the requirement to prepare an annual governance statement signed by the chair of the trustees within seven months of the end of each scheme year, which is a new requirement introduced into the Administration Regulations by regulation 17 of the Occupational Pension Schemes (Charges and Governance) Regulations 2015.
  2. Within the report, the trustee advised that they had quickly taken action and produced the required statement 23 days after the breach had occurred.
  3. TPR imposed a penalty of £500, and on 3 May 2016 the penalty was paid in full by the trustee.
  4. TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

Press contacts

Tim Marks 01273 662092

pressoffice@thepensionsregulator.gov.uk

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