There has been much recent discussion of The Pensions Regulator’s (TPR) new mantra ‘clearer, quicker, tougher’ and what this means for trustees, employers and members. The Department for Work and Pensions’ (DWP) recent publication of a consultation entitled Protecting DB pension schemes: a stronger Pensions Regulator, on 26 June 2018, suggests there is the potential for legislative changes to support this mantra through the widening of TPR’s powers.
TPR’s Compliance and enforcement quarterly bulletin: January-March 2018, published in May 2018, shows that 11,156 fixed penalty notices were issued in the period. These powers have been exercised primarily to influence employer behaviour in respect of auto-enrolment, but also in a number of other limited but still significant circumstances.
While most fines are small in quantum, trustees and employers are concerned by the adverse publicity associated with non-compliance. The prospect, outlined in the consultation, of the introduction of a fine of up to £1 million for breaches which are considered by TPR to be ‘serious in nature’ may well change such views, particularly when coupled with possible criminal sanctions in the event of ‘wilful or grossly reckless behaviour’ in relation to a defined benefit (DB) scheme. Suddenly, the threat to employers and trustees will be much more significant.
As with any penalty regime, the devil will be in the detail. Furthermore, the extent to which TPR will use any new powers will inevitably involve the usual balancing of its resources against the seriousness of the non-compliance and, in all likelihood, the threat that such non-compliance will cause to members’ benefits.
While the new fines would be a significant step up in both number and seriousness from the fines issued to-date, TPR is clearly becoming more prepared to issue penalties if the need arises, as befits the ‘clearer, quicker, tougher’ mantra. The DWP consultation suggests there are interesting regulatory times ahead.
James Bingham is associate director at Sackers