On the go: Fines issued by the Pensions Regulator against two master trusts have been upheld by courts, as the watchdog warned providers to ensure their chairs' statements comply with the law.
In a recent First-Tier Tribunal hearing, judge David Hunter QC rejected an appeal by EC2, the trustee of Smart Pension's Autoenrolment.co.uk scheme, against a £2,000 fine for submitting a 2015-16 chair's statement that was “deficient in five respects”.
In a separate case, judge David Thomas said that although the regulator was right to issue a fine against the trustees of the Moore Stephens Master Trust over its 2016-17 statement, one of the trustees' three arguments could be upheld, and reduced the fine to £500 from £2,000.
Nicola Parish, the regulator's executive director for frontline regulation, said in a statement: “Annual chair's statements are an essential way to show pension savers that their scheme is being properly governed and will deliver the retirement benefits they are promised. That’s why it is the law for trustees to produce chair's statements and make sure they contain all of the necessary information.
“We are pleased that the judges in these cases agreed that under legislation, a mandatory penalty applies to chair's statements which are not compliant," she continued. “As these cases clearly demonstrate, we are prepared to defend our penalties in court. We continue to expect high standards of trustees and will take action when chair's statements are not compliant with the law.”
Responding, Smart Pension hit out at the example the regulator has made of its fine, saying the case shows that clearer regulatory standards are required.
A spokesperson said: “This penalty notice refers to a statement prepared two and a half years ago and to a reporting period three years ago. It was the first public-facing chair statement prepared on behalf of our scheme, and produced at a time when there was no regulatory guidance and the regulator’s expectations were far from clear.
“We appealed against it because we wanted to better understand the regulator’s position on why our notice was upheld while 80 others were revoked. It took legal action to provide adequate clarity on the regulator’s decision-making, which was far from transparent and which reflected its views on timing of responses," they continued.
According to Smart, the regulator revoked penalty notices it had issued where it broke certain timing standards, including issuing the notice more than six months after receiving the chair's statement or less than 14 days before the next statement was due. By comparison, Smart's fine was issued four months and four days after receiving the statement and 18 days before its next was due.
“While the judge upheld the notice, he also suggested that the regulator might ‘consider again the material procedures with regard to fully transparent review decisions’. We fully support the Regulator’s efforts to raise standards, but the key learning from this case is that it must be clearer about its expectations and more transparent in its decision-making,” the spokesperson added.
The Moore Stephens Master Trust was consolidated into Evolve Pensions' Crystal Trust in 2019. Evolve declined to comment, saying the fine was incurred before its ownership of the scheme.
