There are instances where a failure to comply with statutory requirements in relation to pension schemes carry a criminal penalty. Many of these are in relation to automatic enrolment obligations which fall upon employers. The Pensions Regulator, which is responsible for enforcement proceedings in these cases, has recently issued a consultation on its draft prosecution policy which explains how and when it will use its powers in this regard, which will generally only be if non-compliance persists after it has provided support and guidance.
If prosecution proceedings are considered it also says that its aim is not to seek a conviction at all costs; rather it says it will approach each stage of the process in a ‘fair, balanced and impartial manner’. Where an offence is committed by an individual who is senior enough to be regarded as a ‘directing mind and will’ of a corporate body then that body can also be prosecuted. Similarly, where an offence is committed by a company, partnership or unincorporated association, then senior staff can also be prosecuted in certain circumstances. The consultation also highlights the cases where the Regulator may consider referring the case to the Police to issue a warning or caution where the deterrent effect maybe a sufficient and suitable alternative.
Because of the risk of possible criminal sanctions and the many complexities involved for employers in complying with their workplace pension obligations it is important for employers to understand what those obligations are, taking appropriate legal advice where necessary, to ensure compliance. Where breaches do occur employers should ensure there is an open and continuing dialogue with the Regulator about corrective measures to try to avoid the risk of warnings/cautions being given and/or enforcement proceedings being taken.