New TPR powers under the Pension Schemes Act 2021
The Pensions Regulator (TPR) has acquired new powers to protect pension scheme members and the Pension Protection Fund and has set out how it intends to exercise these new powers
TPR’s approach to its new powers
In setting out TPR’s priorities for 2022, Chief Executive Charles Counsell highlights TPR’s intention to take a proportionate approach to the exercise of its new powers under the Pension Schemes Act 2021. He noted:
"What we will not do is overstretch the intent and purpose behind the powers. We will always take an appropriate and proportionate approach.
Our powers should not worry those who are doing the right thing and properly thinking through the actions and decisions they take. They should, however, cause a great deal of concern for those who intentionally or recklessly and without reasonable excuse avoid liabilities or put pension savings at risk."
In September 2021, TPR published a policy on its approach to the new criminal offences brought into law by the 2021 Act.
TPR is also in the process of considering comments received following a public consultation on three enforcement policies relating to its new powers. As part of this consultation, TPR set out differences in its planned approach towards enforcement for those with a professional qualification compared to those without.
In its responses to TPR’s consultation on the new enforcement policies and to its earlier consultation on the new criminal offences policy, ICAS commented on TPR’s approach to professionals (see below).
Proposed new enforcement policies
During the final quarter of 2021, TPR consulted on the following three draft enforcement policies, which are intended to ensure that new powers acquired by TPR under the 2021 Act work with its existing powers.
- Overlapping powers policy. Applicable where TPR has options to pursue both criminal and/ or regulatory powers in respect of the same set of circumstances.
- Monetary penalty powers policy. New penalty powers to impose high fines for information gathering and avoidance related scenarios, for example the avoidance of employer debt.
- Information gathering powers policy. The use of section 72 notices, interviews and inspections in the context of enforcement cases, including TPR's approach to the new fixed and escalating penalty powers for non-compliance.
Under section 72 of the Pensions Act 2002, TPR may serve notices on pension trustees, sponsoring employers, advisers, administrators or any other person who holds or appears to hold information relevant to its inquiries.
The consultation closed on 22 December 2021.
ICAS comments on proposals
In its response to the draft policies, ICAS commented on aspects of the consultation relevant to professionals in circumstances where TPR considers that there has been a breach of a requirement it has set, for example, to provide documents or information or to attend an interview.
TPR has indicated that such a breach could lead to the imposition of fixed and escalating penalties to secure compliance, or in the most serious cases of deliberate wilful misconduct, the commencement of criminal proceedings.
However, where the ‘offender’ is a professional, TPR has stated that it would typically consider criminal proceedings.
ICAS has challenged whether it is reasonable, or even tenable, as a matter of policy to treat an action or inaction by a professional as a potentially criminal matter in circumstances where someone who is not a professional would instead be subject to a civil action.
Criminal offences policy and prosecution policy
Already in place is a new criminal offences policy, which provides guidance on TPR’s approach to the investigation and prosecution of the new criminal offences of ‘avoidance of employer debt’ or ‘conduct risking accrued scheme benefits’.
These new criminal offences were brought into law via the 2021 Act and appear in sections 58A and 58B of the Pensions Act 2004.
The criminal offences policy provides a comparison of these new offences with other related powers, and includes some examples of the types of behaviour that may fall within, and outside, the scope of these new offences.
ICAS submitted a response to the draft criminal offences policy covering several aspects of the policy, including challenging whether the example given of circumstances where an accountant may be considered to have secondary liability was realistic.
TPR’s prosecution policy covers its general approach to criminal investigations and prosecutions for all offences. It is currently being reviewed to reference the new Pension Schemes Act 2021 powers and will remain in force until that update.
Once the new enforcement policies have been finalised these should be read in conjunction with TPR’s criminal offences policy and prosecution policy.
