The Pensions Regulator has continued to demonstrate its tougher approach by fining trustees for non-compliance.
It has also recently used its anti-avoidance powers to secure members’ benefits at the Database Group pension fund.
On Tuesday the Pensions Regulator announced that it has fined trustees at both the M Holleran Pension Plan and New Station Bodyworks Retirement Benefit Scheme for their failure to complete scheme returns.
Over recent months the regulator has been working on increasing its profile, requesting a number of new powers in its submission to the Work and Pensions Committee.
In light of both the BHS collapse and the Tata Steel crisis, the regulator has stressed the need for greater scrutiny to protect scheme members.
Failure to comply
Earlier this year the regulator warned a number of trustees that they could be penalised for not carrying out their basic duties, including the completion of scheme returns.
It wrote to the schemes’ trustees in March, “after they failed to provide a scheme return by the date set out in the notice”.
It seems likely that TPR will continue to clamp down on non-compliance when there is no good excuse for delay, in the hope that it will encourage trustees to “up their game” and hopefully up the positive outcome for members
Victoria Leigh, Squire Patton Boggs
“We advised them that if they did not provide a scheme return by 1 April 2016, or tell us what reasonable steps they had taken in order to comply, we would issue them with a penalty notice,” the regulator added.
However, in September, trustees at both the New Station Bodyworks Retirement Benefit Scheme and the M Holleran Pension Plan were fined £300, because “neither of them had taken any reasonable steps to comply”, said the regulator.
A scheme return provides the regulator with information that helps it maintain its register of pension funds, and helps it identify schemes where there is a potential risk to members’ benefits.
Anti-avoidance
In a more recent demonstration of regulatory strength, the regulator used its anti-avoidance powers as a deterrent to protect members of the Database Group Retirement Benefit Scheme, a small fund with a deficit of around £7.7m.
The regulator said it believed that the sale of the sponsoring business “would have led to an insecure future for the scheme”, prompting it to open an investigation to make sure members “got a better deal”.
Ian Neale, director at intelligence resource Aries Insight, said the main risk was that the Database Group scheme may have been “cut loose” as a result of Merkle acquiring the company.
However, Neale noted that the outcome of the regulator’s investigation was “very good”, because members’ benefits have now been secured in full following the regulator’s intervention.
With regard to the M Holleran Pension Plan and New Station Bodyworks Retirement Benefit Schemes, Neale suggested that their small size “shows that the regulator is paying attention”, even to lesser-known schemes.
He noted that pension funds only receive a scheme return request every three years, “and a lot can go wrong with a pension scheme” in this time period.
“Overall, it’s encouraging to see the regulator using the extensive powers that they’ve got,” said Neale.
Clamping down
Victoria Leigh, partner at law firm Squire Patton Boggs, said “fines for trustee non-compliance are rare”.
However, she noted that the regulator made clear in a statement in April that it wished to raise its profile “and show its teeth more in this area, as failure to complete scheme returns could be a warning sign that a scheme will not be able to achieve good outcomes for members”.
“It seems likely that TPR will continue to clamp down on non-compliance when there is no good excuse for delay, in the hope that it will encourage trustees to ‘up their game’ and hopefully up the positive outcome for members,” Leigh said.
Tim Gosling, DC policy lead at the Pensions and Lifetime Savings Association, said: “While schemes may not be aware that there is a new regime in force, action taken by TPR suggests that TPR intends to use the new enforcement powers it has”.
He added: “Trustees need to ensure they understand all their obligations and are able to discharge them in a timely manner.”
