The Work and Pensions select committee has launched an inquiry into the government’s defined benefit (DB) white paper, which aims “to inform and influence” the planned consultation on the report’s various proposals.
The Department for Work & Pensions (DWP) published last month (19 March) its 76-page DB 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 Pensions Regulator (TPR) 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, where the companies involved have defined benefit pension schemes, is necessary in the coming months.
The committee is inviting evidence from all interested parties, and looking for several answers on specific questions.
MPs are asking, for example, to “what extent is improving The Pension Regulator's effectiveness a matter of greater powers, better use of resources or cultural change in the organisation”.
The committee also wants to know “what can be done to strengthen the regime for clearing corporate transactions (like dividend pay-outs, sell-offs, takeovers) that might weaken a pension scheme”.
Industry experts are also asked to give their views if a criminal offence will provide a meaningful deterrent, and what should "prudent" and "appropriate" scheme funding mean.
Finally, MPs are asking how can the consolidation of the fragmented DB landscape be best achieved, and given the difficulties facing DB schemes, if a faster legislative timetable should be warranted.
A spokesperson for TPR said: “We look forward to contributing to the Work and Pensions committee’s inquiry into the DB pensions white paper.
"The white paper’s proposals will support TPR’s ongoing drive to be clearer, quicker and tougher in the way it regulates.
“Through our TPR Future programme, we have taken stock of the changes faced by the pensions industry and we have already started implementing a wholesale review of our approach to regulation so that we are ready to meet the challenges of the future.”
According to Tom McPhail, head of policy at Hargreaves Lansdown, “the government’s white paper set out a measured approach to address concerns on governance, funding and regulation”.
He said: “However it also has to work within the constraints of the existing system and the government’s capacity for primary legislation.
“The committee’s scrutiny of these processes are unlikely to cause the DWP any great discomfort, however the questions asked about The Pensions Regulator’s use of resources and its culture suggest the committee already has some suspicions about where shortcomings in the system may lie.
“Any oral evidence sessions involving the regulator may make for interesting viewing.”
Interested parties can send their submissions until 18 May.
maria.espadinha@ft.com
