As the Pension Schemes Act 2021 introduced two new criminal offences on Friday (1 October), RSM has warned middle market businesses to remain vigilant until there is more clarity on how the Pensions Regulator (TPR) acts in relation to these offences.
The Pension Schemes Act 2021 introduced two new criminal offences last week: avoidance of an employer debt and conduct risking accrued scheme benefits. There have been concerns raised about how widely these new offences would be interpreted and the impact on ordinary commercial activity. The Pensions Regulator (TPR) set out on Friday how it interprets its powers.
TPR emphasises that it does not intend to prosecute ordinary commercial activity and has provided several examples of what it would consider to be a ‘reasonable excuse’ for actions, outlining three factors that will generally be significant in its assessment: the extent to which detriment to the scheme was an incidental consequence, the adequacy of any mitigation and, if inadequate, whether there was a viable alternative which would have avoided or reduced the detriment.
Donald Fleming, covenant assessment partner at RSM UK comments: ‘Despite these reassurances, TPR cannot issue a clearance statement in relation to these new offences, and it is too early to say whether and how corporate activity in the UK mid-market or the pensions sector will be affected. TPR has also included some warning shots in the statement, for instance against actuaries providing accountancy advice on whether the funding test is met for a flexible apportionment arrangement. So, we expect companies and advisers to tread carefully.’