Employers who mismanage workers’ pension pots could face up to seven years in jail or unlimited fines, as part of a beefed-up response by the government to a series of high profile corporate failures.
Announcing the changes in the Sunday Telegraph, the Work and Pensions Secretary Amber Rudd said “for too long, the reckless few playing fast and loose with people’s futures have got away scot-free.”
“If you run your company pension into the ground, saddling it with massive, unsustainable debts, we're coming for you,” she said.
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Reuters says “Britain has been promising to introduce tougher laws governing the management of pensions for more than a year following the collapse of firms like outsourcer Carillion and department store chain BHS”.
The high-street retailer fell into administration in 2016, leaving a £571 million pension deficit. Sir Philip Green, who sold the company for £1 a year before it went bust, eventually agreed to pay £363 million towards the pot to end legal actions against him by the Pensions Regulator.
But while tougher sentencing has been broadly welcomed, not everyone thinks it is the best way to safeguard workers’ pensions.
Former Lib Dem pensions minister Sir Steve Webb says it could be difficult and time consuming to reach the higher burden of proof needed in criminal cases to show bosses deliberately underfunded a pension scheme and that civil, not criminal, action may be better.
He said that the criminal offence was “a good headline that risks achieving nothing or worse than nothing”.
Noting the initiative was first floated before the last general election in 2017, he told the BBC: “Two years on, we have not even had the primary legislation. We are years away from seeing this in force.”
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