20-20 Trustees is proud of its reputation for supporting complex and distressed schemes and this experience is in more demand than ever as governance and legislative requirements increase, including in the Pension Schemes Act 2021.

What’s changed?

Over the past few years, we have seen a number of pension scheme scandals.  As a result, the industry has been calling for legislation to further protect members.

Described as a ‘watershed’ moment by The Pensions Regulator, The Pension Schemes Act 2021 includes deterrents to prevent pension gatekeepers from ‘running a pension scheme into the ground or plundering pots to line their own pockets.’ The Regulator’s power is strengthened and those aforementioned ‘plunderers’ could now face criminal sanctions such as unlimited fines as well as up to seven years’ imprisonment.

Calls for clarification

However, there have been many calls for clarification on how to interpret the law with regard to the very wide potential criminal liabilities.

TPR is managing a difficult balancing act – while the vast majority of employers and trustees act responsibly all of us want to ensure that members are protected from the reckless and unscrupulous. The questions for the sector are around how TPR will distinguish those who make genuine errors in good faith from those who deliberately act recklessly or worse.

TPR has sought to reassure trustees and says it is not in the business of making trustee lives harder. David Fairs said: “…our powers should not worry those who are doing the right thing and properly thinking through the actions and decisions they take. They should, however, cause a deal of anxiety for those who intentionally want to avoid liabilities or put pension savings at risk.”

Let’s not deter great lay trustees

20-20 Trustees has always championed the development of pension trustees and we believe that providing trustees, employers and other suppliers demonstrate their competence, act responsibly and within the guidelines of the Act, there is unlikely to be cause for concern. TPR’s history of enforcing its powers has been very much focused on the clearest and worst cases, and we would expect no difference here.

We think it is vital as an industry that we do not allow the new legislation to deter lay trustees from joining pension scheme boards.   Provided trustees seek, and follow, the high-quality advice available to them, and maintain laser focus on member outcomes (rather than protecting themselves!) at all times, the new legislation should be considered a positive for both lay and professional trustees alike.

It is however undoubtedly true that the new legislation adds to the governance burden on lay and inexperienced scheme trustees, and there has never been more need for the support of professional trustees to provide that extra layer of security and peace of mind.  

The consultation on the criminal sanctions policy has now closed but genuine questions remain around the legislation including, for example, the scope of the statutory defense of having a ‘reasonable excuse’.

It is important that the new powers act to prevent and allow prosecution of the reckless and unscrupulous but don’t have the unintended consequence of deterring the involvement and contribution of lay trustees on scheme boards.  Some of that is in the drafting, but perhaps more is in how we, as an industry respond and talk to lay trustee (and potential lay trustee) colleagues. We at 20-20 Trustees are hopeful that the DWP, TPR and the pensions industry as a whole will manage to strike the right balance.