The Pensions Regulator has warned that trustees who fail to meet their basic governance duties will receive a financial penalty.

The regulator has issued two compliance and enforcement bulletins to inform the industry of TPR’s experience to date and to increase trustees’ understanding of their duties. The bulletins outline how TPR has used its powers to tackle non-compliance, with legal requirements for pension schemes to complete a scheme return and an annual chair’s statement.

While the majority of an estimated 3,000 schemes complied with new legislation requiring them to put together an annual governance statement, signed by the chair of trustees, 85 schemes received a fine for not preparing a chair’s statement in 2016. A considerable proportion of these were schemes with less than 100 members.

TPR’s second bulletin provides information on the action taken to achieve compliance with legal requirements to provide the regulator with a scheme return.

TPR received 16,963 scheme returns and a further 868 returns after introducing enforcement action against non-compliant trustees. A total of 88 fines were issued to trustees who failed to comply after receiving a warning.

“The scheme return plays an integral part in gathering accurate information about pension schemes, which is why we have adopted a zero tolerance approach to non-compliance with this basic duty. We also consider a failure to complete a scheme return to be a symptom of potential wider governance failings and are looking to take greater enforcement action against these in the future,” TPR said in its Scheme Return bulletin.

TPR executive director for frontline regulation Nicola Parish, said: “Non-compliance with basic requirements such as completion of a chair’s statement and a scheme return may indicate broader governance issues. This is important because ultimately, poor standards of governance can impact the value of members’ pension pots. We want all members to be saving in well-run schemes and will take action to help schemes get the basics right.

"Our 21st Century trustee work is focused on raising the standard of trusteeship and our enforcement action is an important part of that.

"We communicate regularly with trustees to educate them on their duties and to draw attention to our codes and guidance. Our trustee toolkit includes a series of online learning modules and downloadable resources developed to help trustees meet the minimum level of knowledge and understanding introduced in the Pensions Act 2004. Despite this, some continue to fail to meet basic governance requirements. Our message to them is that ignorance is no excuse – if you breach your duties, you will face action."

TPR outlined last year that it would act after data showed compliance with basic duties had fallen 18 per cent. As a result of the regulator’s scheme return compliance and enforcement efforts, over 97 per cent of schemes are now compliant.

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