The Pensions Regulator (TPR) in the UK has issued new guidance on how it intends to use its new criminal sanctions under The Pensions Schemes Act 2021.
David Fairs, TPR’s regulatory policy lead, said: “These new powers will give us more options to punish wrong-doers, but we hope their existence will be a deterrent in themselves.
“We remain a clear, quick and tough risk-based regulator ready to act to protect savers if necessary.”
The new legislation created two new criminal offences, which take effect from Friday 1 October.
The first offence covers the avoidance of employer debt, while the second deals with conduct risking accrued scheme benefits.
The development follows a six-week consultation that received 49 responses.
Meanwhile, the watchdog has also published a response to a public consultation on Code of Practice 12 covering its new powers in relation to contribution notices under the act.
The new powers comprise two new tests. These are an employer insolvency test and an employer resources test. The two tests sit alongside the regulator’s existing main purpose and material detriment tests under earlier legislation.
They mark a significant shift in the focus of TPR’s power by measuring the impact of an employer’s act – or omission – relative to a pension scheme on a snapshot basis. It does this by comparing the situation with and without the act.
The employer insolvency test does this by considering the impact of the act on a hypothetical scheme insolvency outcome. The second test – the employer resources test – weighs the effect of the employer’s actions on the value of its resources relative to the scheme’s deficit.
The regulator complained that its existing powers to issue contribution notices put too much focus on having to prove a material impact on member benefits and too little on the sponsoring employer or other party.
TPR argued that this evidential burden meant it had to show what would happen to benefits in the future.
Finally, the regulator has also opened a new consultation on three new draft policies covering:
- overlapping powers;
- monetary penalties; and
- information gathering powers.
Interested parties have until 21 December to make their views known to the regulator.
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