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Criminal powers policy and update to Code 12 published

Ref: PN21-27

Issued: Wednesday 29 September 2021

A policy on how The Pensions Regulator (TPR) will use new criminal powers to prosecute those who put savers’ pensions at risk has been published today.

A consultation on the approach to other new powers introduced in the Pension Schemes Act 2021 has also been issued.

Among the changes made by the Act are the introduction of two new criminal offences: the offence of avoidance of employer debt, and the offence of conduct risking accrued scheme benefits. Those offences come into force on Friday 1 October.

David Fairs, TPR’s Executive Director of Regulatory Policy, said: “These new powers will give us more options to punish wrong-doers, but we hope their existence will be a deterrent in themselves.

“We made clear in our consultation that we would not use these powers in a way that targets ordinary commercial activity but only for the most serious examples of intentional or reckless conduct.  We listened carefully to the feedback received and throughout the policy document, the examples and case study it now includes, we have strived to provide greater clarity to our regulated community.

“We remain a clear, quick and tough risk-based regulator ready to act to protect savers if necessary.”

Publication of TPR’s policy on its approach to these two new offences follows a six-week consultation which received 49 responses. TPR’s response to that consultation, which outlines the main comments made and the regulator’s responses, has also been published. Following that feedback, the policy now includes a detailed case study illustrating how the regulator expects to consider use of its new criminal powers, as well as identifying some common scenarios where it would not usually expect to consider use of these criminal powers.

During the summer, TPR also conducted a six-week consultation on changes to its Code of Practice 12. This looked at the circumstances in which the new ‘act’ tests in relation to its Contribution Notice (CN) power – also introduced by the Pension Schemes Act 2021 - will be engaged, as well as updating the circumstances in which the existing ‘material detriment’ act test will be met. In total, TPR received 17 responses.

Those new ‘act’ tests - the employer insolvency test, and the employer resources test introduced two additional ways in which TPR can assess the impact of an act for CN purposes, in addition to the existing main purpose and material detriment tests.

These new powers will also take effect from Friday 1 October, and, as already confirmed by the Government, will not apply to acts taking place before then.

Further consultation

Responses to the Criminal Offences consultation reinforced that it would be helpful for TPR’s criminal powers to be put into context in relation to its CN and financial penalty powers, and the interaction with its broader approach to enforcement. TPR also wants to ensure that people understand how it will approach situations where more than one of its powers could be engaged and there is choice about how it will proceed. In addition to the new criminal powers and ‘act’ tests, the Pension Schemes Act 2021 has introduced other new powers, including high fines of up to £1m and expanded powers relating to the gathering of information. Many of these new powers also take effect from Friday 1 October.

Therefore, TPR is publishing a new consultation that contains three draft policies which explain its approach to:

  • Overlapping powers – where TPR has the options to pursue both criminal and/or regulatory powers in respect of the same set of circumstances.
  • Monetary penalty powers – the ability to impose high fines related to information requirements and avoidance related scenarios.
  • Information gathering powers – the use of section 72 notices, the new interview power and broader inspection power, in the context of enforcement cases, including TPR’s approach to the new fixed and escalating penalty powers for non-compliance.

Erica Carroll, TPR’s Director of Enforcement, said: “As well as our criminal powers, the Act gives us a package of other measures that allows us to better investigate areas of concern and deter and punish wrongdoing, all part of our role to protect savers. Our consultation on our criminal powers policy allowed us to listen to the industry and make changes. I therefore encourage industry to engage in our second consultation on our three further policies so we can have a rich and diverse set of views.”

The consultation lasts 12 weeks and will close on 22 December. TPR plans to finalise these policies early in the new year.

Notes for Editors 

  1. The Pensions Regulator 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).

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