Self-invested personal pension provider James Hay has received a £2,000 fine from The Pensions Regulator for failing to produce a so-called chair’s statement.
The penalty, which was imposed by TPR in the second quarter of 2019, is related to one of James Hays’ employee legacy schemes, according to information published on TPR’s website last week (August 22).
FTAdviser understands the GM Benefit Consulting Group scheme, of which James Hay was a trustee, was linked to former ownership and the provider was in the process of closing it when the fine was imposed.
A spokesperson for James Hay said: “This payment relates to an old internal employee legacy scheme which did not involve any external clients and that James Hay was winding down.”
James Hay told FTAdviser that it has already paid the £2,000 fine.
The chair’s statement is the annual document in which the scheme trustees explain the actions they have taken to comply with certain obligations.
It must include information on the scheme’s default fund and its governance, the costs and charges applied, and the assessment of value for members, among other topics.
Where firms fail to provide a chair’s statement they will receive a penalty, which is imposed without an investigation.
David Brooks, technical director at Broadstone Corporate Benefits, said: "The chair’s statement is, by law, vitally important to TPR’s regulation of defined contribution pension schemes. It comes with a great deal of work and effort.
"TPR seem duty bound to name and shame where trustees fail to provide a statement. For an ongoing scheme this seems wholly appropriate."
He added: "However, where legacy schemes are being wound down with a short onward timescale the regulator should demonstrate some pragmatism.
"Before levelling a fine that the failure to produce the statement could result in member detriment or where, conversely, the trustees can demonstrate that producing the statement may result in a loss to members.
"The statement is an excellent way for ongoing schemes to account for their actions to members but it should not be required under all circumstances."
FTAdviser reported last week (August 23) that the government-backed workplace pension scheme Nest, Standard Life and Mercer also received similar fines from the regulator for not complying with chair statement requirements.
Nest was fined because the chair statement didn’t include a hyperlink to its statement of investment principles – the link was written out instead - and due to the fact that the information given on the review of the scheme’s default investments, conducted during the year, was considered insufficient.
Mercer was fined after information on reviewing its trustees was not fully set out in the annual statement and Standard Life was hit with a penalty after TPR found some “minor technical breaches” in its chair statement.
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