The Pensions Regulator's (TPR) soon-to-be implemented new powers have 'hidden' teeth that could threaten to rip into businesses' corporate activity, says law firm Dundas & Wilson.

Pensions Age has been told that the retrospective element relating to corporate activity from 14 April 2008 in the new rules is of concern to the law firm.

"The main issue is that the powers are potentially so wide-reaching, and could impact on general corporate activity, such as acquisition of companies - before they are fully clarified," explained Mathew Boyle, solicitor in the pensions team at Dundas & Wilson.

He said that the 'wait and see' element of how TPR will employ its new powers is a frustrating one while companies anticipate to what extent TPR will target pension corporation-type vehicles.

Boyle advises that companies who are refinancing or restructuring their businesses, or considering the acquisition of another business, bear these increased powers in mind. "The message is that because of the retrospective effect of the legislation, these increased powers need to be taken account of by trustees and companies now and - if necessary - appropriate legal, financial and actuarial advice taken."

Meanwhile, TPR has issued warnings to trustees and pension funds on fraud, dishonesty and whistle-blowing.

In its Alert to risks in the downturn document, the regulator covers these areas as it again reaffirms its commitment to taking sanctions where needed to stamp out unacceptable behaviour. It also reminds trustees, employees and pension professionals that they are legally obligued to 'become' whistle-blowers if they note any suspicious activities.

"In these tougher times, we will continue to monitor the economic situation and, along with our partners, to continue to focus on the key risks in the system to ensure that the promises made in pensions are upheld," said Tony Hobman, chief executive of TPR.

"We remain assured that the regulatory framework is flexible enough to cope with the impact of the economic downturn, and will continue to remain vigilant through the downturn and encourage others to do the same, and to contact us if they have concerns.

"In doing, we hope to ensure uniform adherence to the high standards shown by the vast majority to secure a level playing field and the long-term protection of UK pensions," he added.

- Pensions Age April 2009

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