August 11, 2020

Volume X, Number 224

August 11, 2020

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August 10, 2020

Subscribe to Latest Legal News and Analysis

UK Pensions Regulator: First Mandatory Fine for Failure to Issue Pension Trustee Chair’s Statement

The UK Pensions Regulator (TPR) has issued its first fine to the trustees of a pension plan who failed to comply with the new legal requirement to prepare an annual governance statement, signed by the chair of trustees. The trustees received the minimum mandatory fine of £500 in this case.

Since last year, a new statutory requirement means that trustees of defined contribution (DC) pension plans must prepare an annual governance statement, which sets out how governance requirements have been met, or a mandatory fine will be imposed of up to £2,000. This statement must be prepared within seven months of the end of each scheme year.

In this first case of a fine being issued, it is interesting to note that the trustees complied with their duty to notify TPR of the breach and also quickly rectified the breach by producing the required statement 23 days after the breach had occurred. The actions of the trustees were taken into account by TPR in the calculation of the amount of the fine.

TPR reminds trustees in its regulatory intervention report on the case that “Trustees should be aware that we are required by law to impose a penalty where this type of breach occurs. This is still the case even when… the trustee notifies us of the breach and takes immediate remedial action”.

The Executive Director for Regulatory Policy at TPR, Andrew Warwick-Thompson, added “We hope that our report will act as a reminder and a deterrent for other schemes”.

On that note, we would urge trustees of DC pension plans to issue the required statement in time. However, if this deadline has been missed, you should take immediate remedial action and notify TPR of the breach.

Fines imposed on the trustees of a pension plan by TPR cannot be paid out of the plan’s assets. Payment will therefore need to be made from an alternative source, for example, by the sponsoring employer or out of trustees’ own pockets. Trustees who are fined by TPR will also need to notify their insurer.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume VI, Number 194

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About this Author

Stephanie Wigman, Squire Patton Boggs, legislative compliance attorney, employee plan documentation lawyer
Associate

Stephanie joined the pensions practice in Birmingham in 2009 having completed her training with the firm, including a secondment to the Paris office.

Stephanie advises on all aspects of occupational pension plans including governance, legislative compliance, plan documentation and member queries and communications.

In addition to advisory work, Stephanie is regularly involved in the practice's independent trustee work, where she actively assists in providing independent trustee services to a wide range of defined...

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