Pursuing success
01 April 2019
This article was featured in the April 2019 issue of the magazine.
The Pensions Regulator comments on its success with AE and emphasises its commitment and plans
Ten million people – equal to the population of Sweden – are now taking the right steps towards being comfortable in retirement.
Working with the government, we’ve changed the savings culture. Automatic enrolment (AE) is now business as usual for employers and staff can expect a pension as part of their jobs. As a result of AE, well above 84% of staff are now saving into a workplace pension.
Over the past seven years since AE began, we’ve heard in our conversations with employees that they’re pleased they have been put into a pension. We’ve heard over and over again that they probably wouldn’t have signed up for a pension themselves and that they’re glad it was done for them. And now, people are continuing to save and to save more. Inertia has been a powerful factor and in no small part explains the success of AE.
But we can’t always rely on inertia. We want people to actively appreciate the benefits and necessity of saving. We want savers to get to know their pension and decide what they’ll need to save to be able to look forward to their retirement.
Increasing engagement and knowledge means giving people easy access to information they need. That’s why we’re committed to supporting government and the industry in creating a pensions dashboard. It will be fantastic to be able to give savers the opportunity to access and understand their pension savings in the way they now access all their other accounts.
But, as well as helping savers play their part, we are working hard to ensure employers continue to meet their responsibilities and that where people put their money, stays safe. We’re doing that through master trust authorisation and by being clearer, quicker and tougher where we find trustees are failing to meet our expectations.
As our recently published compliance and enforcement bulletin shows, The Pensions Regulator is taking wide-ranging action to protect savers and ensure staff receive the pensions they are entitled to. The report highlights that we continue to use new approaches and powers to disrupt, deter and punish dishonest activity. This includes serving a summons in our first prosecution for fraud and employer related investments against a trustee who was also a qualified accountant. In another case, we executed warrants linked to six people suspected of fraud which led to arrests and questioning.
Our intervention is also leading to fairer treatment for pension schemes. In the last quarter of 2018, interventions helped a number of employers and trustees agree on shorter recovery plans, which put paying deficit repair contributions before dividend payments.
We are happy to help employers to comply with their workplace pension duties and have people on hand to assist. But those who fail to do what is required of them, whether deliberately or not, should be prepared for us to take action so that staff get what is rightfully theirs. And, while accountants and advisers have played a vital role in helping millions of employers to meet their pension duties, as recent prosecutions show, The Pensions Regulator will be tough on those who enable employers to avoid their legal duties, for example by making false declarations of compliance.
More than 1.4 million employers have done the right thing for their staff and we’re delighted so many now have the opportunity to save for later in life. But we are not complacent and will continue to ensure employers and their advisers meet their responsibilities.
...will continue to ensure employers and their advisers meet their responsibilities
A stronger TPR
The Department for Work and Pensions has recently published its response to the consultation Protecting Defined Benefit Pension Schemes – A Stronger Pensions Regulator, which was conducted during 2018.
Amongst other things the government will introduce two new criminal offences to prevent and penalise mismanagement of pension schemes. The penalties and punishment for those individuals found guilty of these new offences comprise:
- a new custodial sentence of up to seven years’ imprisonment or an unlimited fine
- an unlimited fine where the person fails to comply with a Contribution Notice issued by TPR.
A new power will also be introduced enabling TPR to issue civil penalties of up to a maximum of £1,000,000 for certain serious breaches, which will apply to a range of new and existing offences.
The response document can be found here: http://bit.ly/2VGRkzY.