As expected, the Government reintroduced the Pension Schemes Bill (the “Bill”) into Parliament last week. The Bill has been published in near-identical form to the original version laid before Parliament in October 2019 prior to the general election.
The Bill would introduce two new criminal offences carrying a maximum penalty of seven years in prison where any person, without reasonable excuse:
- engages in an act or conduct that they knew or ought to have known would have a “materially detrimental effect” on a defined benefit pension scheme; or
- commits an act that prevents the recovery of employer debt due to a defined benefit pension scheme or otherwise compromises or settles such a debt (including by means of arrangements permitted under pensions law).
The wide ambit of these proposed new criminal offences is likely to make ordinary corporate activity much more difficult for groups which operate defined benefit pension schemes. This includes paying dividends, reorganising and/or restructuring a corporate group, M&A activity or granting security to a lender.
For further details of the new criminal offences and other provisions that will impact on corporate activity, please see our briefing below: Managing pensions risk: new Pensions Regulator powers and criminal offences.
We will be holding a webinar on Wednesday, 5 February at 2pm (UK time) to discuss the new criminal offences and the impact of the Bill on corporate activity. If you would like to join our webinar, please register here.