The industry has called for further clarity around the Pensions Regulator’s new prosecution policy.
TPR is consulting on its policy for investigating and prosecuting the new criminal offences which were included in the Pensions Schemes Act. These include the of avoidance of employer debt to the scheme or risking accrued members’ benefits.
However the Society of Pension Professionals (SPP) said TPR policy did not adequately distinguish between conduct giving rise to criminal sanctions, which should be reserved for the most serious misconduct, and conduct giving rise to civil liability.
Meanwhile the Employer Covenant Practitioners Association says this latest guidance too widely drafted — and normal corporate behaviour could still be deemed an offence.
ECPA chair Andy Palmer said: “When the new offences were introduced by the Parliamentary Under-Secretary of State it was stated that the intention of legislation was ‘to punish those who wilfully or recklessly harm their pension scheme’, but not to ‘stop legitimate business activity’.
“The ECPA remains wholly supportive of this objective. The legislation is however so widely drafted such that normal corporate behaviour could be deemed an offence.
“It is the view of the ECPA that the guidance from TPR still does not provide enough clarity as to how TPR will ensure that only the worst offenders are charged with the offences.
“Furthermore, the guidance does not give sufficient comfort that legitimate corporate behaviour or accepted commercial practices will not be prosecuted. Greater clarity could be achieved by the use of additional examples to reduce the grey areas, leaving less to interpretation and bringing indictable behaviour into sharper relief.”
Christopher Stiles, a member of the Society of Pension Professional’s Legislation Committee echoed these concerns. He said: “While criminalising behaviour which intentionally or recklessly puts savers’ pensions at risk may be commendable, the Regulator’s draft prosecution policy allows a far wider range of conduct to fall within the scope of the new offences.
“Successful prosecutions and effective deterrence would be more likely if the policy were clearer on what behaviour is now considered so unacceptable as to be criminal. This clarity would not only protect the innocent, but also better serve the interests of pension scheme members.”
In its response the SPP is calling for clarity on a number of issues:
- This policy to explain how TPR will interpret and apply the concept of “reasonable excuse” in a practical context when deciding what cases to prosecute.
- The Regulator to include trustees of pension schemes in the policy, and to provide reassurance that trustee actions taken in good faith will not result in prosecutions.
- The policy to help employers determine which side of the line conduct would fall in difficult situations – the examples in the draft policy relate to extreme scenarios, but the difficult areas in practice will be the less black-and-white situations which fall in between, such as restructuring arrangements.
- The policy to make clear that persons other than the employers and trustees should not be expected to act against their own interests merely because there is a possible consequential effect on a pension scheme.
- The Regulator to commit to maintaining a public record of what published guidance was in force at any given time, available on its website, so it can easily be established what guidance was available to participants at the relevant time.
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