The Pensions Schemes Act received Royal Assent yesterday (11 February).
For those involved in restructuring it is important to be aware that the Act introduces new offences, carrying hefty fines and the possibility of imprisonment that apply to “any person”. Given the wide scope of the drafting the new offences could capture directors, insolvency practitioners, lenders and other professional advisors commonly involved in a restructuring whose only defence to such a claim is that they acted with “reasonable excuse” – a term not defined in the legislation.
Our previous blog here sets out why the new offences cause concern for the insolvency profession, and our pensions colleagues’ alert sets our more detail about the changes and actions for trustees and employers.
Even though the criminal sanctions are aimed at punishing those who put a pension scheme at risk and criminal liability carries a high bar, the risk of a civil claim and potential fine of up to £1 million, may be a risk that some are not willing to take when seeking to restructure a company that has a defined benefit pension scheme.
The Pensions Regulators powers will be brought into force by regulations that are still awaited. However, practitioners should be mindful of the fact that the new criminal sanctions can capture “a series of acts” which could potentially capture actions taken before the regulations come into force.