29 September 2021
Following the publication of The Pensions Regulator (TPR) criminal offences policy and revised code of practice 12 today just two days before TPR is granted extensive new powers, LCP have warned that all parties will need to tread carefully to avoid falling foul of the new rules.
Jonathan Camfield, Partner at LCP, said: "Many in the pensions world had raised concerns on the breadth of the new TPR powers during the passage of the Pension Schemes Bill (now Act) through Parliament, and the draft policy published by the Pensions Regulator back in March did little to allay these concerns. The final guidance and further consultations issued today is the Regulator’s attempt to allay concerns and provide more clarity.
"The revised criminal sanctions policy recognises some of the practical challenges set out in responses to the consultation. For example, there is reference that the extent to which alternative courses of action have been considered is dependent on the context, with a recognition that the timescales of M&A/restructuring can mean that decisions need to be made quickly – and this will be factored into TPR’s decision on whether a party has a ‘reasonable excuse’. These and other new examples are helpful.
"However, even with these helpful practical considerations, it is still not clear where the boundaries will lie in practice, particularly when it comes to what many might call ordinary commercial activity – for example moving cash funds around a group or paying a dividend to a parent company, and all parties will have to tread carefully as things will only become clearer when we see the first few cases.
“What is clear is that the new powers raise the bar. Many company boards will need to more actively consider the impact of various business decisions on the pension scheme, engage with trustees sooner, and keep more careful records about what they are doing and why it is reasonable from the viewpoint of the pension scheme.”