On 4 May 2022, the Pensions Regulator (TPR) published two draft policies for consultation: a draft scheme management enforcement policy and an updated draft prosecution policy.
The scheme management enforcement policy incorporates TPR’s finalised approach regarding the use of its “overlapping powers” (ie, the ability to impose high financial penalties and/or criminal sanctions in relation to the same act) and its “information-gathering” policies. TPR consulted on these in autumn 2021 alongside policies concerning the imposition of high financial penalties, up to £1mn. TPR has therefore, also published final separate versions of its high fines policies in relation to use of its (i) avoidance-type powers and (ii) information requirements.
Moreover, TPR has published its response to last year’s consultation on the proposed approach to its new powers and states that the draft enforcement policy takes account of stakeholder responses.
TPR has powers to intervene in the management of pension schemes or where corporate activity puts members’ benefits at risk. Many of these powers have been in place since the Pensions Act 2004, such as the power to intervene in scheme funding matters including, for example, to be able to modify future accrual or to impose penalties for breaching employer-related investment limits. Readers will be aware that the Pension Schemes Act 2021 extended these powers markedly, allowing TPR to impose much higher financial penalties and to prosecute specified criminal acts. It also widened the range of parties against whom many of these powers could be exercised.
Largely in response to concerns that normal business activity could be adversely affected, TPR has sought to make clear when and how it would use its powers and to set these out in formal policies.
This combines three existing policies covering TPR’s approach to the investigation of cases and potential enforcement action in relation to defined benefit, defined contribution and public service schemes. The draft follows the modular approach adopted for the draft Single Code of Practice, which TPR hopes will help users navigate through it.
It comprises 12 chapters, some of which are divided into sub-sections. Of these, the chapters headed “Investigations” and “Overlapping powers” contain TPR’s finalised policies from last year’s consultation including updated examples of how it expects to exercise its overlapping powers. These pages are marked clearly to say that these chapters are not open to consultation.
The brief chapter headed “Assessment of risk and harm” outlines the factors TPR considers relevant in determining what, if any, action to take, while another three chapters cover use of TPR’s enforcement powers, outcomes sought – which includes prevention, remedy, restoration and deterrence – and the enforcement options available to TPR. The last of these refers to the issuing of statutory notices, anti-avoidance powers, financial penalties and criminal powers.
The remainder of the draft policy covers matters such as the enforcement procedure, how to challenge enforcement action and TPR’s approach to publishing information about cases.
The compliance and enforcement policy for Master Trusts, as well as that concerning automatic enrolment, remain separate.
This is comparatively short and sets out, amongst other things, TPR’s general approach to prosecuting criminal offences, who it can prosecute and how it will select cases for investigation and prosecution. It also outlines what actions it may take including the issuing of cautions and preventing offenders from benefitting financially from their criminal activity.
Responses should be on TPR’s standardised form published as part of the consultation and must be made by 24 June 2022 to PSA21policies@tpr.gov.uk.
