Vol 17 (2020) - Issue 3

Article preview

New Pensions Regulator Powers and Criminal Offences: The Impact on Restructurings

Synopsis

In January 2020, the UK Government reintroduced the Pension Schemes Bill (the 'Bill') to Parliament.
The Bill includes a number of provisions which would significantly impact on restructuring activity involving financially distressed groups with a UK defined benefit pension scheme, including:
– two new criminal offences which would carry a maximum penalty of seven years in prison;
– a widening of the circumstances in which the Pensions Regulator (the 'Regulator') could issue a 'contribution notice' to make connected third parties liable for pension scheme deficits;
– new procedural requirements to provide advanced notification and accompanying statements to the Regulator about the impact of certain corporate activity on a pension scheme;
– an expansion of the Regulator's investigatory powers, including an ability to require any person to attend an interview and a power to inspect records at parties' premises (including unannounced raids); and
– civil penalties of up to £1m for providing misleading information to defined benefit pension scheme trustees.
This article summarises the impact of the Bill and what financially distressed businesses (and in particular their directors) can do to ensure that their decision-making in relation to a restructuring properly considers and addresses the impact on UK defined benefit pension schemes.