Employers be aware – big changes to the defined benefit pensions landscape come into force
Some of the biggest changes to the defined benefit pensions landscape in recent years come into force on 1 October 2021. Much has already been made of the provisions of the Pension Schemes Act 2021. Here is a rundown of what comes into force on 1 October (note that these provisions do not have retrospective effect):
- Getting money into schemes – the Pensions Regulator gains two new grounds on which to issue a contribution notice – the employer resources test and the employer insolvency test. Contribution notices can be issued to an employer in relation to a defined benefit pension scheme, or to a "connected" or "associated" person. For further information on these new grounds, see Blog: contribution notices
- Three new criminal offences – carrying the possibility of imprisonment for up to seven years, and/or an unlimited fine. The new offences are: failing to comply with a contribution notice, avoidance of an employer debt, and conduct risking accrued scheme benefits. For further information on these new offences, see Blog: criminal offences
- Financial civil penalties of up to £1
million, which can be levied by the Regulator for:
- Avoidance of an employer debt;
- Conduct risking accrued scheme benefits;
- Failure to comply with a contribution notice;
- Failure to comply with the notifiable events regime;
- Provision of false or misleading information to the Regulator or trustees.
- Enhanced investigative powers for the Regulator and escalating financial sanctions for failure to comply.
- What's not coming into force (yet) is the requirement for employers with defined benefit pension schemes who are undertaking certain corporate transactions, to provide a "declaration of intent" to the Regulator or trustees. This is not expected to come into force until April 2022.
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