The move, announced today by Secretary of State for Work and Pensions, Esther McVey, comes in the wake of calls for the directors of failed construction firm Carillion be held personally liable for their company’s pension deficit.

Three main areas are being consulted on in the process.

Improving the regulator’s and trustees’ role in scrutinising corporate transactions:

• How the notifiable events framework could be made clearer and more effective; whether the right events are captured especially in more complex scenarios, ensuring that the Regulator is notified of appropriate events at the right time;
• How the new ‘declaration of intent’ should be designed and implemented so that employers engage appropriately with the trustees, and that trustees and the regulator are provided with meaningful information without putting undue burdens on businesses;
• How this should be enforced.

Improving the sanctions regime to deter wrongdoing in most cases, and punish it when necessary:

• What behaviours and actions (or inaction), and in what circumstances, should attract sanctions;
• What type of sanctions are appropriate in these different scenarios (e.g. fines up to the existing maximum, fines with a new higher maximum, or criminal sanctions);

Improving the regulator’s existing powers to issue contribution notices and financial support directions.

• What improvements to the Regulator’s current powers could be made to make it more efficient to compel related companies to provide financial support to a scheme, and requires companies to compensate a scheme if they have caused loss or detriment to the scheme;
• How such powers should be enforced.

Vikki Massarano, Partner at ARC Pensions Law, welcomed the process.' The consultation puts some more flesh on the bones of the proposals in the recent White Paper, particularly about changes to the Notifiable Events Framework, higher civil penalties and new criminal sanctions,' she said but added that it would not help prevent another Carillion-like pension scandal as the regulator already had adequate powers but had failed to exercise them.

'It’s hard to see that there would have been a different outcome in the case of Carillion even with these new powers in place. The Regulator had both its “moral hazard” powers and powers in relation to scheme funding at the relevant times which it did not exercise. Rather than more powers, perhaps a change in approach to exercising powers would have made more difference,' she said.

The consultation will run until 21 August 2018.

Protecting defined benefit pension schemes – a stronger Pensions Regulator is here. 

Report by Rob Munro