Pensions minister Guy Opperman has confirmed the government’s support for a bill designed to stop trustees or managers from using a scheme’s assets to pay fines for breaches of pensions dashboards legislation.
Last week (July 15), Conservative MP Mary Robinson led the second reading of a bill that will amend section 256 of the Pensions Act 2004.
“Although pension scheme members may be able to take civil action, nothing currently in legislation prohibits rogue trustees or managers from using a pension scheme’s assets to reimburse themselves to repay fines they incur for breaches of pensions dashboards legislation, which is backed by criminal sanction,” she told MPs.
Section 256 currently prohibits the reimbursement of penalties issued under other pieces of pensions legislation, such as automatic enrolment.
“We therefore consider the proposed amendment to that act to be a very logical and welcome change,” Opperman said.
If the bill passes through parliament successfully, a trustee or manager who had been reimbursed from their scheme’s assets with knowledge or reasonable grounds to believe that they had been reimbursed would be guilty of a criminal offence, unless they had taken all reasonable steps to prevent it.
Those found guilty could face up to two years in prison or a fine, or both.
In addition, the Pensions Regulator would have the power to slap civil penalties on trustees or managers who had “failed to take all reasonable steps to secure compliance”, Opperman said.
The bill received the support of the Labour party, with Karen Buck telling fellow MPs: “The opposition agrees with the principle that pension scheme trustees must be responsible for any failure to meet their legal requirements.”
Buck cited a warning from TPR last month that suggested that without the bill, the costs of fines linked to the dashboard could fall on members.
The bill was read a day after the government announced that it would delay its timetable for connecting the first two cohorts of pension schemes to the dashboards programme, with the Department for Work and Pensions having admitted that the staging timetable was “ambitious”.
Alex Janiaud is deputy editor at Pensions Expert, FTAdviser's sister publication