Wilfully mishandling company pensions could become UK criminal offence Wilfully mishandling company pensions could become UK criminal offence

Wilfully mishandling company pensions could become UK criminal offence
29 Mar 2018

The UK government is considering making wilful or reckless behaviour in the handling of company pension funds a criminal offence.

A new ‘Protecting Defined Benefit Pension Schemes’ white paper proposes giving The Pensions Regulator (TPR) tougher powers to intervene when employers evade their obligations. Measures could include giving TPR the power to punish organisations that deliberately put their pension schemes at risk by improving the effectiveness of its existing anti-avoidance powers, and introducing punitive fines.

TPR is currently allowed to pass on any evidence of criminal offences to law enforcement agencies, but the government said it would seek to enhance the current situation to enable the regulator to act in a “clearer, quicker and tougher” way.

Lesley Titcomb, TPR’s chief executive, said in a statement: "Planned improvements to our scheme funding, information-gathering and anti-avoidance powers will enable us to be clearer about what we expect from employers in relation to scheme funding, and tougher where a scheme is not getting the funding it needs."

But Steve Webb, director of policy at Royal London, said the danger was that the new laws could end up becoming no more than “gesture legislation”.

"Clamping down on employers that wilfully under-fund their pension schemes will obviously be a popular measure,” he said. “But proving that someone has wilfully or recklessly failed to fund their company pension is likely to be extremely difficult, and company bosses are likely to have good lawyers."

According to People Management, a consultation on the matter will be carried out over the coming months. But an act of parliament is considered unlikely to come into force before fiscal year 2019/20, and further detailed regulations will be required after that date.

Demand for greater enforcement measures follows a series of pension scandals around the collapse of industry giants, including construction firm Carillion, which went bust in January with a reported pension deficit of £587 million (US$827 million).

Retailer Toys R Us also went into liquidation recently, shedding 33,000 jobs with as-yet-unknown pension losses. BHS, whose 2016 bankruptcy saw the pensions of more than 19,000 employees come under severe threat, was later saved by a settlement with former owner Philip Green.

Graham Vidler, director of external affairs at the Pensions and Lifetime Savings Association, said: "Employer covenants are under pressure and failures like Carillion, BHS and, most recently, Toys R Us clearly signal that this is a situation that cannot be ignored. We are glad to see that the government has been looking at the relationship between good corporate governance and good outcomes for pension scheme members."

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

 

The UK government is considering making wilful or reckless behaviour in the handling of company pension funds a criminal offence.

A new ‘Protecting Defined Benefit Pension Schemes’ white paper proposes giving The Pensions Regulator (TPR) tougher powers to intervene when employers evade their obligations. Measures could include giving TPR the power to punish organisations that deliberately put their pension schemes at risk by improving the effectiveness of its existing anti-avoidance powers, and introducing punitive fines.

TPR is currently allowed to pass on any evidence of criminal offences to law enforcement agencies, but the government said it would seek to enhance the current situation to enable the regulator to act in a “clearer, quicker and tougher” way.

Lesley Titcomb, TPR’s chief executive, said in a statement: "Planned improvements to our scheme funding, information-gathering and anti-avoidance powers will enable us to be clearer about what we expect from employers in relation to scheme funding, and tougher where a scheme is not getting the funding it needs."

But Steve Webb, director of policy at Royal London, said the danger was that the new laws could end up becoming no more than “gesture legislation”.

"Clamping down on employers that wilfully under-fund their pension schemes will obviously be a popular measure,” he said. “But proving that someone has wilfully or recklessly failed to fund their company pension is likely to be extremely difficult, and company bosses are likely to have good lawyers."

According to People Management, a consultation on the matter will be carried out over the coming months. But an act of parliament is considered unlikely to come into force before fiscal year 2019/20, and further detailed regulations will be required after that date.

Demand for greater enforcement measures follows a series of pension scandals around the collapse of industry giants, including construction firm Carillion, which went bust in January with a reported pension deficit of £587 million (US$827 million).

Retailer Toys R Us also went into liquidation recently, shedding 33,000 jobs with as-yet-unknown pension losses. BHS, whose 2016 bankruptcy saw the pensions of more than 19,000 employees come under severe threat, was later saved by a settlement with former owner Philip Green.

Graham Vidler, director of external affairs at the Pensions and Lifetime Savings Association, said: "Employer covenants are under pressure and failures like Carillion, BHS and, most recently, Toys R Us clearly signal that this is a situation that cannot be ignored. We are glad to see that the government has been looking at the relationship between good corporate governance and good outcomes for pension scheme members."

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

 

Leave a Reply

All blog comments are checked prior to publishing