The government’s White Paper (a stage in the process of developing legislation) on protecting “defined benefit” pension schemes has been published. Amongst the various ideas, it sets out a wide range of proposals to combat the ways in which pension scheme members have, avoidably, lost out in corporate insolvencies.
The proposals will require refinement before anything can become law (and that is not anticipated for at least a year) but the main areas of focus from the point of view of companies, investors and insolvency risk are:
- adding to the Pensions Regulator’s powers to investigate and pursue claims against those who have mismanaged and/or caused losses to pension schemes;
- a new criminal sanction for activity that causes losses to a pension scheme through “wilful or grossly reckless behaviour” by directors of companies responsible for funding pension schemes;
- updating the process by which a transaction which could impact on a pension scheme can be “cleared” by the Pensions Regulator, although it appears unlikely that there will be a requirement for clearance to be obtained; and
- the Pensions Regulator will be given greater powers to gather information about a pension scheme (including the power to compel individuals to attend interviews and a power to inspect premises for purposes relevant to its functions).
The government has said that, although it will take time for any legislation to be passed, some of the law will be given retrospective effect from the time when the White Paper was published in March 2018. In other words, assume it is already law.