This in from the office of Isle of Wight Conservative MP, Bob Seely. Ed
MP Bob Seely has welcomed the new measures to give workers assurances their future retirement savings are safe when a company fails.
The White Paper “Protecting Defined Benefit Pension Schemes” was announced in Parliament this week and will make it a criminal offence for companies to neglect pension schemes.
The proposed law could see businesses and their owners 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.
Penalties for companies that neglect pension scheme duties
“Workers who have paid into a pension scheme for many years need to know their money is safe and these new measures will help that to happen and hold those who flout their responsibilities to account.
“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 the 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 the Government is taking action to protect their pensions.”
What is a Defined Benefit Pension?
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.
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.
The White Paper comes after a wide-ranging consultation with workers, employers and the pensions industry.