On 26 June, the Department for Work and Pensions (DWP) launched a consultation into the white paper Protecting Defined Benefit Schemes, which it published in March 2018.
In addition to the higher fines and criminal prosecution, the white paper includes a raft of proposals that will allow the regulator to act more quickly when companies make changes that could potentially damage a pension scheme.
Policy details revealed
The consultation paper outlines further details of the policies outlined in the white paper, including the DB pensions fine system.
It says the fines system will complement the existing penalty regime with new penalties that can be imposed as appropriate, for both low-level compliance breaches and more serious offences.
“We believe that the range of possible targets should include all of those who have responsibility to the pension scheme. This includes directors, sponsoring employers and any associated or connected persons, and in some circumstances trustees,” the document says.
The consultation closes on 21 August 2018.
Consultation first of many
The consultation is the first of several that will focus on different areas of the DB pension white paper.
The initial consultation addresses proposals to improve the Pensions Regulator’s powers so that it:
- Can be more proactive and get involved earlier when employers make changes which could impact the pension scheme;
- Can obtain the right information about a scheme and its sponsoring employer; and
- Is able to gain redress when things go wrong.
“This is an opportunity to strengthen protection for Defined Benefit pensions and it is extremely important we get the changes right,” the DWP says in the consultation.
Scrutiny
The white paper came under scrutiny at the time of its release as it followed the British Steel Scandal and the collapse of Carillion.
Tom Selby, senior analyst at AJ Bell, said at the time of its release the report was a “damp squib” because it was afraid of recommendations which might shake fragile business confidence.
However, DWP secretary of state Esther McVey, says in the introduction to the consultation that the UK already has a robust system in place to protect DB pensions and she expects most people will get their pension paid in full.
“However, the pensions landscape is constantly changing, and recent high-profile cases have highlighted the fact that we cannot be complacent.
“We need to ensure that the defined benefit system is tough enough to deal with abuses and continues to work in the best interests of those involved – for members and pensioners, for today’s workforce and for employers,” McVey said.
She said the proposals outlined in the white paper are meant to clarify the rules and expectations, but otherwise not make fundamental changes to the existing system.
“For the vast majority of responsible employers who are already engaging effectively with their trustees, the impact of these changes and new requirements is likely to be limited.
“However, for the small number of employers evading their obligations, we are putting in place stronger powers so that the Pensions Regulator can intervene more effectively to protect individuals’ pension rights,” McVey said.
She said the consultation is the next step in delivering this programme of change.
Maria Madrid says:
Criminal prosecution for all those involved in fraudulently obtaining elderly people’s savings or mismanaging pensions. Feeble “regulation” is the cause of suffering for thousands (perhaps millions) of pensioner victims of financial scams. Time for “jail time”.