The U.K.'s The Pensions Regulator is looking for industry input on its new criminal sanctions policy, including two new charges the regulator may bring against pension fund sponsors.
The regulator was given new powers under the Pension Schemes Act 2021, which was enacted in February and allows TPR to investigate and charge company executives for misconduct related to pension funds.
Under the draft policy outlining the new charges, TPR could prosecute sponsors for avoiding to pay debt owed to pension funds and for putting benefits at risk, starting in the fall.
"The intent of the new criminal offenses is not to change commercial norms or accepted standards of corporate behavior," said David Fairs, executive director of regulatory policy, in a news release Thursday. "Rather it is to tackle the more serious examples of intentional or reckless conduct that puts members' savings at risk, and strengthen the deterrent and punishment for that behavior. Our policy is consistent with this intent."
Alongside company directors that might have acted to the detriment of the plan without a reasonable explanation, money managers and service providers could also be investigated.
The regulator said investment managers that encourage plans to change their current appropriate investment strategy to a riskier one — to earn higher fees — might also be liable.
Legal advisers and actuaries could be investigated and charges brought against them for their advice on the funding levels if they are proved to be hiding an employer's true intention.
Employers that sever links with their plans without compensating for the loss of support, companies that make significant financial gains to the detriment of their plans or those that withhold information about the plan's situation could also be prosecuted.
Commenting on the proposed policy, Peter Murphy, partner at law firm Sackers & Partners, said: "Reassuringly, TPR intends its approach to be guided by statements already made in Parliament, that the new offenses are not intended to give rise to a fundamental change in normal commercial practice or accepted standards of corporate behavior in the U.K."
The proposal is open for comment until April 22.