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TPR flexes powers to safeguard savers in small DB scheme

Ref: PN22-07

Issued: Tuesday 29 March 2022

A new report published today demonstrates how The Pensions Regulator will take enforcement action to safeguard savers in schemes of all sizes, and against individuals.

TPR used its powers to issue a £2million contribution notice to an overseas parent company – and secured a £130,000 settlement with a senior company executive to help protect a 600-member defined benefit scheme.

As set out in the regulatory intervention report TPR used its anti-avoidance powers against SMT Scharf AG, a German mining equipment business with global interests and subsidiaries, in support of the scheme for the employees of the Dosco Group, a UK-based engineering business.  A financial settlement was secured with a former Chief Executive of the Dosco Group, Martin Cain.

SMT Scharf AG sold the Dosco Group to a management buyout company which had no realistic prospect of being able to support the business. As a result the pension scheme’s sponsoring employers went bust eight months after the sale.

The case also marks the first time TPR’s Determinations Panel has awarded additional sums for lost investment returns and interest, as set out in its Determination Notice

Executive Director of Frontline Regulation Nicola Parish said: “This case sends a clear warning to corporate entities and individuals that TPR will take action where appropriate to protect schemes regardless of their size. It also shows that the fact a target is based overseas is no obstacle to the use of our anti avoidance powers.

“Scharf showed a complete disregard for the scheme which was left with no funding or prospect of financial support. We put savers at the heart of all we do and we take an extremely dim view when their interests are deliberately neglected in this way.”

The RIR has been published alongside TPR’s latest compliance and enforcement bulletin which shows how many times it has used its powers between July and December 2021.

The bulletin highlights that the use of powers – including in relation to automatic enrolment – has remained broadly steady since the previous bulletin covering the six-month period of January to June last year.

TPR issued:

  • 20,555 compliance notices (compared to 35,087 for the previous period)
  • 13,376 unpaid contribution notices (compared to 11,921)
  • 17,284 fixed penalty notices (compared to 22,542)
  • 6,988 escalating penalty notices (compared to 7,407)

 The reduction in the use of some powers represents a reduction in the number of employers due to complete their re-enrolment responsibilities in the previous six-month period.

Director of Automatic Enrolment Mel Charles said: “Despite the challenges of the past two years since the start of the pandemic, our indications are that employers have continued to do the right thing for their staff. However, we are not complacent, and we continue to keep a close eye on compliance, targeting our resources where they are most needed in line with our risk-based approach.”

In respect of the use of TPR’s frontline regulation powers, the total number of statutory powers used was 244 compared to 286 in the previous six-month period.

Notes for editors

  • 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 TPR’s functions under Part 3 of the Pensions Act 2004 only). 

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