PLSA AC 2020: Criminal offences outlined in PSB will make industry ‘nervous’ to take action

New criminal offences outlined in the Pension Schemes Bill (PSB) will make professionals in the pensions industry “very nervous” about taking action when an employer is struggling, Pinsent Masons partner, head of pensions and long-term savings, Carolyn Saunders, has warned.

Speaking on the PSB the PLSA Annual Conference 2020, Saunders cited concerns that broad definitions of who may fall foul to the criminal sanctions in section 107 of the bill will create “unwelcome and unintended consequences”.

The offences will criminalise actions that result in the avoidance of an employer debt or that materially affect the likelihood of accrued scheme benefits being received by members without ‘reasonable excuse’.

“Just at a time when we are anticipating that many employers will be in financial difficulty, we will be looking for creative solutions to support those employers and their pension schemes,” Saunders continued.

“The spectrum of these criminal offences is going to mean that employers, trustees, professional advisers and third-parties, for example banks who are refinancing the employer, are all going to be very nervous about taking action.

“That may mean that things that should be done to help the employer’s help the pension scheme won’t get done.”

Saunders also warned that the sanctions, in some cases, could damage the relationship between trustees and the employer, as the trustees could be seen as being uncooperative when, “very sensibly”, they are protecting their position and the position of the employer.

Furthermore, the new offences could conflict with the government’s Corporate Governance and Insolvency Act, designed to give companies more flexibility when they are in distress.

“The point was made in the House of Lords that things that are legitimate under the Corporate Governance and Insolvency Act could well be criminal offences under the Pension Schemes Bill,” Saunders added.

“The result, I think, of all of this is that it potentially undermines the underlying policy intent of the bill, which is to protect DB members and their benefits.

“In summary, there is a place for the criminal sanctions, but they need to be properly focused and if they are not, they will do more harm than good.”

    Share Story:

Recent Stories

Sovereign bonds and climate change considerations
In Pensions Age's latest podcast, Laura Blows is joined by Hilary Norris, Product Manager, Sustainable Investment, EMEA, FTSE Russell, to discuss sovereign bonds and climate change considerations

Climate Investing
Laura Blows speaks to Aled Jones, Head of Sustainable Investing for Europe at FTSE Russell, and Adam Matthews, Director of Ethics and Engagement for the Church of England Pensions Board, about the role of climate investing within a pension fund portfolio.

Managing volatility
In the latest Pensions Age podcast, Laura Blows speaks to Cambridge Associates head of European pension practice, Alex Koriath, about the Covid-related market volatility and how pension funds can prepare for the challenges ahead

Risk transfer opportunities
Laura Blows speaks to Lisa Purdy, Head of Fiduciary Distribution at Legal & General Investment Management and Gavin Smith, Pricing and Execution Director - UK PRT at Legal & General, about the impact of the recent market volatility on the bulk annuity and risk transfer market and the potential opportunities for the future

De-risking options for pension schemes
In this latest Pensions Age podcast, Linklaters' Sarah Parkin talks to Laura Blows about the wide range of choice available to pensions schemes for the partial, or full, removal of their risks