The Pensions Bill is expected to become law in early 2021. It is largely unchanged from last autumn’s draft (see our previous summary provided to trustees and sponsors) – but are you focused on how you should be changing behaviours now? The Bill will give the UK Pensions Regulator stronger powers both to seek remedial action and to punish stakeholders (including companies, lenders and their advisors, under current wording) who act (or fail to act) in the interests of UK pension scheme members. This will affect all restructuring situations with a UK DB Scheme and is likely to change the behaviours of corporates, lenders, advisors and trustees.
As our Profit Warnings report showed, there is still a lot of turmoil in a number of sectors. Common restructuring activities like sale & leasebacks and additional temporary secured facilities are potentially caught under the proposals in the new Bill. Previous pensions acts have applied tests retrospectively, so we think it is worth factoring in now to avoid the robust investigation and potential new criminal penalties that may be coming down the line when the Bill comes into law.
A reminder of the most significant and relevant impacts to restructuring events proposed by the Bill:
- Enhanced powers to tackle “irresponsible management” of pension schemes and against those who “recklessly risk” peoples’ pensions benefits’, allowing the Pensions Regulator to act more quickly and forcefully
- New criminal offences with up to seven years’ prison and civil penalties up to £1m
- Greater power to access information from employers on a timely basis to support enforcement activity