MP for Rochester and Strood has today said the new government measures to crack down on bosses recklessly putting pensions at risk would give workers the assurances they needed that their future retirement savings were safe when a company fails.
The White Paper “Protecting Defined Benefit Pension Schemes” laid before Parliament today (MON) will make it a criminal offence to neglect pension responsibilities and could see businesses hit with fines or even prison sentences if they fail to meet their duty. The move comes in the wake of the BHS and Carillion collapses.
There are more than 10.5 million Defined Benefit Pension scheme members in the UK and most employers are doing the right thing and people will get their pension in full. Employers behaving correctly will not see major changes but everyone will be given clear instructions of what is expected from them.
Kelly Tolhurst MP said: “Businesses need support to ensure they can grow and prosper but they also have a responsibility to their employees to meet their pension promise.
“I am delighted Government listened and is introducing penalties for companies that neglect their duties to their pension schemes.
“Hopefully this will act as a deterrent to businesses and reassure workers that Govt are taking action to protect their pensions.”
A Defined Benefit Pension is where the employer promises a specified pension payment, or lump sum, or combination on retirement. It is predetermined by a formula based on earnings, length of service and age, rather than being based on individual investment returns.
Under the changes the Pensions Regulator will be given more powers to get the information they need quickly. Tougher penalties will be introduced, including hefty fines and criminal convictions for those who “wilfully or recklessly” put the financial future of employees at risk.
The White Paper comes after a wide-ranging consultation with workers, employers and the pensions industry. Other initiatives will support consolidation of DB schemes, making them more efficient and improving Governance.