UK & Europe
Insurance & Reinsurance
A strengthened regulatory framework for the UK’s pension regulator (TPR) is set to put directors and officers (D&Os) and trustees under increased legal pressure, whatever the election result.
In the light of a number of high-profile corporate collapses which resulted in significant detriment to defined benefit occupational pension schemes, in 2017 the Government commenced a consultation on strengthening the regulatory framework for TPR. This review culminated in the Government proposing a suite of legislative changes in early 2019, including enhanced information-gathering and sanction powers.
Notably for sponsoring employers and their D&Os, the proposals include a new criminal offence of wilful or reckless behaviour in relation to a pension scheme, attracting a prison sentence of up to seven years and/or unlimited fines. It is also proposed that TPR will have the ability to impose civil penalties of up to £1 million for a range of new offences, including for knowingly or recklessly providing false or misleading information to TPR or to scheme trustees.
The Pension Schemes Bill 2019-2020 was finally introduced to Parliament in mid-October 2019 with a view to bringing these new powers (and other changes) into being. Although the Bill fell with the dissolution of parliament prior to the December 12th General Election, the current UK pension minister (Guy Opperman) has said he believes the broad cross-party support for these changes means that the Bill will most likely be revived in the next session.
Therefore, whatever the outcome of the election, TPR looks set to become an increasing force to be reckoned with in 2020. The proposed new civil penalty regime alone, if enacted, represents a significantly enhanced regulatory exposure for sponsoring employers, their D&Os and pension trustees.
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