Pensions Regulator - powers of intervention and enforcement need to be proportionate and clear
Proposals to increase the anti-avoidance powers of The Pensions Regulator are likely to place further strains on employers’ commitment to occupational pension schemes, says ACCA (the Association of Chartered Certified Accountants).
Under the Pensions Act 2004 the Pensions Regulator currently has powers to issue financial support directions and contribution notices in cases where employers are considered to have avoided the debts they owe to their pension schemes.
The Department of Work and Pensions (DWP) is now proposing a number of significant extensions to these powers of intervention, plus new powers for the Government to make further changes by secondary legislation.
It is now proposed that the Regulator should have the power to issue contribution notices, not only when there is found to be deliberate non-compliance on the part of employers but also when ‘avoidance’ is the unintended consequence of employers’ actions. This, says ACCA, would widen significantly the scope of regulatory intervention, and could cause considerable uncertainty among employers leading to an increase in demands upon the Regulator to give advance clearance for employer plans.
The proposals also envisage making it easier for the Regulator to issue financial support directions by enabling it to take into account the support that could be provided to a struggling scheme from the combined resources of any group structure that it might belong to. The current defence for an employer of having acted in good faith would also be removed and replaced by a retrospective test linked to what employers could ‘reasonably have foreseen’ as regards the implications of their actions for the security of members' benefits.
John Davies, head of business law at ACCA, says: “The Regulator is entitled to have adequate powers to insist that employers honour their commitments to their pension schemes in the interests of the members of those schemes and of the Pension Protection Fund. But its powers of intervention and enforcement need to be proportionate and clear, and employers need to know exactly where they stand. The danger that new powers could become disproportionate and confusing could increase if future changes and extensions are not subjected to adequate consultation.
“ACCA considers that the main focus of anti-avoidance measures should remain on acts of deliberate avoidance on the part of employers, and there is scope for making improvements to the current regime without expanding it unnecessarily and introducing undue complexity.”
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Notes to Editors
1. ACCA is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We have 325,606 students and 122,426 members in 170 countries worldwide.
2. ACCA believes that globalisation of business requires one set of reporting standards. We favour principles-based, not rules-based standards, which is why we support the worldwide implementation of IFRS.
3. ACCA believes that tax systems should be transparent, simplified, fair and certain.
4. Complying with regulations affects SMEs disproportionately, which is why ACCA urges governments and standard setters to ‘think small first'’
For further information please contact:
For further information: Helen Thompson, ACCA Newsroom phone: +44 (0)20 7059 5759 / + 44 (0)7725 498 654 e mail: helen.thompson@accaglobal.com