Opinion  

The Pensions Schemes Bill: a work in progress?

Elizabeth Ovey

Elizabeth Ovey

It’s anybody’s guess how far the Pensions Schemes Bill will progress, given that the general election has been set for December 12.

So any consideration of its proposals has to take place against the background of an unusual degree of uncertainty as to whether the bill, in any form, will make it to the statute book.

If one did make a guess about the Bill’s ultimate future, however, it would probably be a fairly safe bet that one way or another much of its content will at some time come back before Parliament. 

It’s very largely the fruit of extensive consultation carried out by the Department of Works and Pensions (DWP) over the past two years on a number of different issues and it’s difficult to suppose that any government would not want to promote measures intended to “support pension saving in the 21st century, putting protection of people’s pension at [their] heart”, as the explanatory notes to the Queen’s Speech put it. 

Moreover, the major parts of the bill have some obvious appeal and the proposals in relation to defined benefit (DB) schemes build on manifesto commitments.   

Regulatory power

As foreshadowed in the White Paper 'Protecting Defined Benefit Pension Schemes', one of the effects of the bill will be to extend the regulator’s information-gathering powers by enabling it to require persons to attend for interview in relation to DB schemes generally and to widen the circumstances in which an inspector may visit premises. 

That will give greater consistency in the powers available to the regulator across the field of its activities.

The notifiable events regime will also be widened and tightened up.

Schemes protection

These are positive steps for the protection of schemes. After all, having or being able to obtain the relevant information is a necessary prerequisite to the exercise of powers.

The new criminal offences also foreshadowed in the White Paper are there as well, in the form of the offences; the avoidance of employer debt and conduct risking accrued scheme benefits, both of which carry a maximum sanction of a seven year prison term and a fine. 

Further, the regulator will have the power to impose a financial penalty of up to £1m for such behaviour and for the provision of false or misleading information to the regulator or to trustees or managers.

In addition, the regulator will have wider powers to impose fixed and escalating penalties for failures to provide information. 

It’s difficult to predict how effective these provisions will be in deterring employers from the sort of activities which have hit the headlines in the past.