作者

Louise Jennings

Professional support lawyer

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作者

Louise Jennings

Professional support lawyer

Read More

2021年7月5日

R&I update – July 2021 – 3 / 6 观点

UK Pensions Regulator's new criminal powers – implications for directors and others involved in defined benefit pension schemes

  • Quick read

The Pension Schemes Act 2021 introduces two new criminal offences in the context of defined benefit pension schemes: 

  • the offence of avoidance of employer debt, and
  • the offence of conduct risking accrued scheme benefits.

The offences will not apply when a person has a "reasonable excuse". 

Why are these offences causing controversy?

  • Severe penalties: up to seven years in prison and/or a potentially unlimited fine.
  • Expanded liability: any person could be liable, aside from an appointed insolvency practitioner acting within their functions; this includes directors, professional advisers, contractual counter parties and lenders.
  • Wide scope of the offences: the potential for directors and others involved in business activity such as a restructuring, refinancing or M&A activity to fall within these provisions and face potential criminal liability. 

How and when will they be implemented?

The Pension Regulator's (TPR) draft Guidance on how it plans to use the criminal powers, and examples of what it would consider a "reasonable excuse", have helped to ease some concerns. Further clarity on the scope of the offences and other issues is still needed, though.

The provisions are expected to come into force by 1 October 2021 and it has been indicated, would not be retrospective in their effect. However, the draft Guidance states that TPR will look at evidence pre-dating the commencement date when assessing acts or failure to act which happened after that date.

Practical steps

While there is no clearance procedure regarding the criminal offences, clearance can be obtained from TPR against the risk of a "contribution notice" or "financial support direction" being issued which could provide a possible "reasonable excuse". All those involved in any way with a DB scheme need to be fully aware of the new powers, consider the risks of any relevant business activity and seek advice.

Find out more

To discuss the issues raised in this article in more detail, please reach out to a member of our Restructuring & Insolvency or Pensions teams.

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