Middle market businesses have been encouraged to remain vigilant and tread carefully until there is more clarity on how The Pensions Regulator (TPR) plans to use its powers around new criminal offences.
RSM UK noted that it was too early to say how the mid-market and pensions sectors would be affected by the newly introduced rules.
The offences, which were outlined in the Pension Schemes Act 2021, came into force on 1 October, with TPR issuing a publication on how it interprets the powers and how it plans to use them, following a consultation.
TPR emphasised that it does not intend to prosecute normal commercial activity and provided several examples of what it would consider to be a ‘reasonable excuse’ for actions, outlining three factors that be measured in its assessment: the extent to which detriment to the scheme was an incidental consequence, the adequacy of any mitigation and, if inadequate, whether there was a viable alternative which would have avoided or reduced the detriment.
“Despite these reassurances, TPR cannot issue a clearance statement in relation to these new offences, and it is too early to say whether and how corporate activity in the UK mid-market or the pensions sector will be affected,” said RSM UK covenant assessment partner, Donald Fleming.
“TPR has also included some warning shots in the statement, for instance against actuaries providing accountancy advice on whether the funding test is met for a flexible apportionment arrangement. So, we expect companies and advisers to tread carefully.”
Avoidance of an employer debt and conduct risking accrued scheme benefits are now criminal offences, with TPR stating that powers will give it “more options” to punish wrong-doers and, hopefully, act as a deterrent.
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