Financial Reporting Standards
Insolvency and Recovery
Risk Consulting - Financial Services
Tax for Private Clients
VAT and Customs Duty services
Life Sciences and Healthcare
Mining and Energy
Property and Construction
Technology and Media
Corporate Social Responsibility Commitment
Diversity and Equal Opportunities
Gender Pay Report
Taking our women further
Strengthening TPR powers on the horizon
Shona Harvie, Partner, Pension Funds Group
In February 2019 the Government issued its response to the ‘Consultation on Protecting Defined Benefit Pensions Schemes – A Stronger Pensions Regulator’. New measures give TPR increased corporate transaction oversight, greater ability to implement penalties, further anti-avoidance powers and greater information gathering powers. The new measures will be developed and then put into legislation. The aim is to protect pension scheme members and to intervene where employers may be evading their obligations.
Increased corporate transaction oversight
Two new employer-related notifiable events will be introduced covering:
the sale of a material proportion of the business or assets of a scheme employer which has funding responsibility for at least 20% of the scheme’s liabilities
the granting of security on a debt to give it priority over debt to a scheme.
A Declaration of Intent will also be required in respect of the sale of a controlling interest in a sponsoring employer and the new notifiable events listed above. The Declaration of Intent needs to be shared with the pension trustee board and TPR.
TPR will also review guidance on the Voluntary Clearance process focusing on the material detriment definition and how this test should be approached, the definition of event types, and what to expect during the clearance process, including the timing of applications.
A new civil penalty of up to a maximum of £1 million will be introduced for serious breaches and two new criminal offences, targeting sponsoring employers, to prevent and penalise mismanagement of pension schemes.
Wilful or reckless behaviour in relation to a pension scheme could receive up to 7 years imprisonment and/or unlimited fines, and/or the new civil fine of up to £1 million.
Failure to comply with a contribution notice could receive unlimited fines and/or the new civil fine of up to £1 million.
Further anti-avoidance powers
The Contribution Notices regime will be reviewed, putting more focus on the impact on the scheme by the ‘act’ when assessing the amount to be demanded in the Contribution Notice sum. In addition changing the date on which the cap on the level of a Contribution Notice is calculated to a date closer to the final determination.
Financial Support Directions/Financial Support Notices scope will be extended to capture controlling shareholders of the sponsoring employer (who are individuals), and the ‘Insufficiently Resourced’ Test will be replaced with a new test, which will be scheme-focussed.
Greater information gathering powers
TPR will be granted Interview Power to require any ‘relevant person’, who can reasonably assist TPR in discharging any of its functions to attend an interview. TPR would be required to issue a notice giving a date, time and explaining broadly what the scope of the interview would be about. TPRs Inspection Power will be extended to enable TPR inspectors to enter any premises where documents or records are kept which are relevant to the exercise of any of TPR’s functions.
Fixed and escalating civil penalties for non-compliance with the interview and inspection powers will be included in primary legislation with the levels of the fixed and escalating penalties detailed in secondary legislation.
How Crowe can help
If you would like to discuss any of these aspects further and how the changes could affect your scheme arrangements, contact your usual Crowe Pension Funds advisor.
Partner, Pension Funds Group
+44 (0)20 7842 7105
Read Shona's full CV