Insights and Analysis

New offences, penalties, powers for the Pensions Regulator: what employers and trustees should know

16 March 2021

After the Carillion and BHS debacles, the Pensions Regulator (tPR) announced it was going to be "clearer, quicker and tougher". The new Pension Schemes Act 2021 (the Act), which received Royal Assent on 11 February 2021, gives tPR significant new powers so it can beef up its approach. Most provisions are not yet in force and we expect consultation on draft regulations and guidance before tPR’s new powers have effect.

Corporate groups with defined benefit pension (DB) schemes should understand the Act’s new requirements because failure to comply could result in large fines or being charged with a criminal offence . For corporate groups with DB schemes, this is the most significant change in regulation since the Pensions Act 2004.

The key message is be alert to anything that could weaken the financial position of the employers supporting the DB scheme or that could prejudice the DB scheme in an insolvency. In these circumstances, exercise caution and take advice.

In particular:

The Act creates new criminal offences, some punishable by up to seven years' imprisonment, plus a new civil financial penalty of up to £1m.
The circumstances in which the Regulator can issue a contribution notice (CN) requiring funding to be made to a DB scheme will be widened.
The Regulator will have increased powers to demand information, inspect premises or require an individual to attend an interview.
The notifiable events regime, requiring the Regulator to be told of specified events, will be extended.
The scheme specific funding regime will be strengthened, with a new requirement for trustees to prepare a "funding and investment strategy".
This note explains the various changes made by the Act and explores some of the implications for employers, trustees and others.

Click on the Download button to read the full briefing note.