The Secretary of State for Work and Pensions Amber Rudd has outlined plans to introduce a seven year jail term for the “wilful or reckless behaviour” of company directors who play “fat and loose” with their pension scheme.
The new proposals, outlined in the Government Response to the Consultation on Protecting Defined Benefit Pension Schemes – A Stronger Pensions Regulator, published today (11 February), will target “reckless” company bosses who have “got away scot free” through “acts of astonishing arrogance … punished only with fines that barely dent bosses’ bank balances”.
According to the government, the law will be aimed at company bosses who allow the pension deficit to reach unsustainable levels, “or who endanger their workers’ savings through chronic mismanagement”.
Rudd said: “The vast majority of bosses take their responsibilities seriously and look after their workers’ retirement funds.
“However, for too long the reckless few playing fast and loose with people’s futures have got away scot-free. Acts of astonishing arrogance and abandon punished only with fines, barely denting bosses’ bank balances.”
Furthermore, the government said it will also introduce an “unlimited fine” for those who fail to comply with a contribution notices, a notice issued by TPR which requires a specific amount of money to be paid into a pension scheme, as well as a new civil penalty of up to £1m.
“The changes will build on the robust system that is already in place to protect Defined Benefit pension schemes, and will help to ensure that the system is equipped for the challenge of a continually evolving pension’s landscape,” Rudd added.
Many consultation responses supported streamlining the process around contribution notices.
Commenting on the announcement, Work and Pensions Committee Chair, Frank Field, said: “The Secretary of State deserves huge credit for stepping in to sort this so early in her tenure, where others have so long failed to act.
“But most people would be aghast to hear that this law doesn’t already exist. How could it ever have been legal for company bosses to recklessly or wilfully or risk their workers’ pensions?
“Retrospection in the law is usually to be avoided, and for good reason. But the actions of greedy bosses like those at BHS and Carillion have torn apart thousands of people’s plans for the future. In such exceptional circumstances shouldn’t the long arm of the law be able to reach into the past, to gain justice for those who lost so much?”
The government said it will continue to work closely with TPR to deliver the measures outlined in its consultation response.
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