New data published by the Pensions Regulator (tPR) at the beginning of July shows that trustees of pension schemes who fail in their basic duties can expect to receive a penalty.
TPR has issued two compliance and enforcement bulletins showing how it has used its powers to tackle non-compliance with legal requirements for pension schemes to complete a scheme return and annual chair’s statement. The aim of the bulletins is to inform the industry of tPR’s experience to date and to increase trustees’ understanding of these duties.
The majority of schemes complied with new legislation obliging them to prepare an annual governance statement, signed by the chair of trustees. During 2016, 85 schemes received a mandatory fine for not preparing a chair’s statement. A large proportion of those failing to produce a statement were schemes with fewer than 100 members.
A second bulletin details the action taken by tPR to achieve compliance with legal requirements to provide tPR with a scheme return. Scheme returns help to provide tPR with an understanding of the pensions landscape as a whole, which in turn feeds into policy formulation and lobbying of central government. The information contained in scheme returns also alerts tPR of any risks, or potential risks, to members’ benefits, ranging from failing to appoint the correct number of member nominated trustees through to significant concerns about the fitness and propriety of the trustees, for example due to a conviction for fraud.
TPR received 16,963 scheme returns, and after starting enforcement action against trustees received a further 868 returns. A number of trustees failed to comply even after receiving a warning from tPR and consequently 88 trustees were fined.
Last year tPR made clear it would act after data showed compliance with basic duties had fallen 18%. According to tPR, as a result of their focus on scheme return compliance and enforcement efforts, over 97% of schemes are now compliant.