The Pensions Regulator (TPR) will have new powers to fine and prosecute company bosses that put their workers’ gold plated pensions at risk.
The Department for Work & Pensions (DWP) published today (19 March) its 76-page defined benefit white paper, which sets out a series of new measures for the regulator "to undertake a tougher and more proactive role".
Besides creating new legislation to introduce a criminal offence to punish those found to have committed wilful or grossly reckless behaviour in relation to a pension scheme, the government is also giving the watchdog powers to disqualify company directors, and introducing new punitive fines.
The government will also consider if the introduction of a targeted mandatory clearance process for specific corporate transactions is necessary in the coming months.
Details about the new powers and rules will only be available after consultations with the industry in some cases, and with new legislation, in others.
Esther McVey, secretary of state for Work & Pensions, said: "At the heart of the white paper is a strong message for employers tempted to act in a way that is detrimental to their pension scheme.
"We will not tolerate such behaviour, and will come down heavily on attempts by employers to avoid their responsibilities.
"We are supporting The Pensions Regulator to be a clearer, quicker and tougher organisation by giving it new and improved powers to gather information and require employer co-operation.
"Where there is evidence of unscrupulous behaviour, we are introducing measures including a punitive fines regime and, in the most serious cases, a new criminal offence for those who deliberately and recklessly put their pension scheme at risk.”
The DWP paper also establishes new funding requirements for DB schemes, and announces that the government will work on the consolidation of the sector, by launching a consultation this year on new rules in this area.
However, for some pension specialists’ today’s government announcement isn’t enough.
Sir Steve Webb, director of policy at Royal London and former pensions minister, said: “Clamping down on employers who wilfully under-fund their pension schemes will obviously be a popular measure.
But proving that someone has wilfully or recklessly failed to fund their company pension is likely to be extremely difficult, and company bosses are likely to have good lawyers. There is a risk that this is simply ‘gesture legislation’ which will never be used in practice’.”
Sir Steve added that the other measures “also look worryingly slow”.
He said: “Helping small pension schemes to consolidate into larger schemes could be helpful, but legislation appears to be years away.
“With an Act of Parliament likely to have to wait until 2019/20 and further detailed regulations needed after that, it could be a long time before today’s paper has any practical impact.
“All in all, there is little in this paper that offers reassurance that we will not be reading about another Carillion or another BHS in the months and years to come.”