New guidance on how The Pensions Regulator (TPR) will use its new criminal powers to investigate and prosecute those who avoid employer debts to pension schemes or put savers’ pensions at risk has been published today for consultation.
TPR has published the draft policy and a consultation on how it plans to use these criminal powers given to it by the Pension Schemes Act 2021.
This 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 not yet in force but are expected to be by 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 policy sets out factors which we think should be significant in answering that question.
David Fairs continued: “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.”
Today’s consultation is open for six weeks and will close on Thursday, 22 April 2020. TPR will review all consultation responses and make any appropriate changes before publishing the final policy later this year.
Notes for editors
1. In the case of the offence of avoidance of employer debt, the offence can apply to anyone who:
a. prevents the recovery of the whole or any part of a debt due to the scheme under section 75 of the Pensions Act 1995
b. prevents such a debt becoming due
c. compromises or otherwise settles such a debt, or
d. reduces the amount of such debt which would otherwise become due
2. 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.
3. TPR welcomes comments on any aspect of its draft policy, in addition to the four questions asked in the consultation:
a. Given that the offences have now been set in law, is our overall approach consistent with the policy intent?
b. Is the policy clear on our overall approach to the new offences? If not, how could we make it clearer, without constricting the powers?
c. Is the policy clear on how cases will be selected for investigation? If not, how could we make it clearer?
d. Are the examples useful in illustrating the factors that we will take into account when considering whether a potential defendant has a reasonable excuse to act or fail to act? Are there any other examples you would consider helpful?
2. TPR operates in a risk-based and proportionate way when considering use of its powers. The operation of the new offences will follow this existing approach. Its work is driven and directed by its statutory objectives. TPR only uses its powers where it is appropriate and reasonable to do so.
3. 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).
