With the Pension Schemes Act 2021 (the "Act") now fully enacted, the pensions world awaits the various regulations needed for many of the measures in the Act to come into force. The Government provided an update at the start of March, setting out what they see as the next steps for bringing the various aspects of the Act into force (for further discussion of the various aspects of the Act, see our previous blog) and TPR has just provided a further updated in its recently published corporate plan for the period 2021-2024. For many, the most highly anticipated regulations will be those relating to the new criminal powers afforded to The Pensions Regulator ("TPR") by the Act, with many wondering how TPR will approach the investigation and prosecution of the new criminal offences.

This blog provides an update on the expected timing of the secondary legislation/guidance to bring various aspects of the Act into force and looks at the recently published TPR draft policy 'Our approach to the investigation and prosecution of the new criminal offences' (the "Policy").

Timing of secondary legislation/guidance required to implement various aspects of the Act

A written statement was published on 2 March 2021, setting out the next steps for the Act, as anticipated by the Government. The table below sets out the timing of the various aspects of the Act.


Draft regulation consultation

Measures expected to come into effect

Climate Change provision

Closed in March 2021.

The climate change provisions were brought into force on 24 May 2021 and the draft Regulations are expected to be brought into force in October 2021.

TPR has just confirmed in its recently published corporate plan that TPR will also publish guidance during 2021/22 on its regulatory expectations in relation to the new climate change reporting regulations and develop a regulatory approach to the new requirements (including an enforcement regime).

TPR powers and criminal offence measures

N/A. TPR has issued two consultations – one in relation to its new criminal powers (which is now closed) and one in relation to Contribution Notices which is still open. However they did not consult on new regulations but rather how TPR envisages it would exercise the new powers.

October 2021 – confirmed by TPR in its corporate plan.

The Pensions Regulator is currently consulting on an amended version of its code of practice on Contribution Notices: Circumstances in relation to the material detriment test, the employer insolvency test and the employer resources test. The draft code includes reference to the two new tests, enacted in the Pension Schemes Act 2021, which extend the grounds on which the Regulator can issue a contribution notice. The consultation closes on 7 July 2021.

Changes to the Notifiable Events regime

Late 2021

2022 – TPR has indicated in its corporate plan that the changes to the Notifiable Events regime will not be brought into force until 2022.

Defined Benefit Scheme Funding

Late 2021

Late 2022/early 2023 - TPR has just confirmed in its Annual Funding Statement 2021 that it expects the revised Code to be in place by "2022 at the earliest" and that scheme valuations are expected to comply with the new framework from the point at which the new code comes into force.

Restrictions on Pensions Scheme Transfers

Early Summer 2021

Early Autumn 2021

Pensions Dashboard

Expected 2022


Collective money purchase schemes

Summer 2021


TPR's draft Policy "Our approach to the investigation and prosecution of the new criminal offences"

TPR's draft Policy is "for anyone seeking to understand our approach to investigating and prosecuting the new criminal offences of avoidance of employer debt to the scheme or risking accrued members’ benefits".

Generally, TPR expects the circumstances in which it would consider prosecution to be broadly the same as those in which it would consider seeking a Contribution Notice (CN) under its current powers so it does not expect to broaden the current range of activities that it will investigate. The Policy makes clear that TPR do not intend to change commercial norms or accepted standards of corporate behaviour in the UK but "rather it is to tackle the more serious examples of intentional or reckless conduct that puts members’ savings at risk; and strengthen the deterrent and punishment for that behaviour". Whether TPR abides by this statement of intent will only become clear once we see the application of the powers in real live cases and the kinds of behaviour which TPR chooses to prosecute.

It is apparent that these new powers are Parliament's response to some of the high-profile defined benefit pension scheme "abandonment" cases in the last few years and that they are intended to give TPR additional options when responding to the types of scenarios where they would usually consider using their contribution-notice (CN) powers. Responding to being questioned on whether it will go down the CN or criminal-prosecution route or both, TPR has said it will "be guided by the efficient use of our resources to deter repetition of similar bad behaviour and act as a warning to others".

"Reasonable excuse" defence

As mentioned in our previous blog, a 'reasonable excuse' defence will be applicable to the new criminal sanctions. In terms of what that will constitute, TPR notes in the Policy that "a professional person, acting in accordance with their professional duties, conduct, obligations and ethical standards applicable to the type of advice being given, is likely to have a reasonable excuse". However, this does not exclude professional persons (e.g. legal advisers or actuaries) from potential prosecution where TPR considers that they have carried out, helped or encouraged prosecutable acts or omissions. Therefore it is essential that professional persons advising pension schemes understand the new criminal offences and how they could potentially apply to their involvement in scheme decision making.

TPR expects those being investigated to provide an explanation for their actions and sufficient evidence to make the basis of the 'reasonable excuse' clear. The question of whether a 'reasonable excuse' is apparent will depend on the facts of the specific case, but the Policy does set out three factors which TPR consider will be significant in determining whether a 'reasonable excuse' exists:

1. Whether the detrimental impact on the scheme was an incidental consequence of the act or omission.

2. The adequacy of mitigations provided to offset the detrimental impact.

3. Where no, or inadequate, mitigation was provided, whether there was a viable alternative which would have avoided or reduced the detrimental impact. 

    Therefore it is crucial that both corporates and trustees ensure that all decisions are well documented, with clear evidence of the reasons for making the decision and the advice received prior to reaching a decision, so that sufficient evidence can be provided to establish a 'reasonable excuse' if called upon to do so by TPR. Advisers should also make sure to keep comprehensive records of advice given to pension schemes, particularly when providing advice to assist with decisions which could fall within the scope of the new criminal offences.

    Potential scenarios where TPR might consider prosecution

    The Policy then also provides examples of scenarios where TPR will consider prosecution, as well as examples of how the 'reasonable excuse' test may be applied. However, the examples provided are not comprehensive, and schemes may find themselves having to consider situations which are not covered by the Policy. We would hope that further guidance with an expanded range of examples will be published in due course, to provide further clarity on what would happen in a wider variety of circumstances. However, we would recommend seeking legal advice in relation to any areas of uncertainty surrounding the new criminal offences.

    Looking forward (but also potentially back!)

    It is worth re-iterating as well that, as mentioned in our previous blog, TPR has indicated on more than one occasion now (contrary to previous Ministerial assurances) that prior events may still be relevant when establishing an accused person’s intentions. This creates an obvious dilemma in terms of how to 'behave' when considering or, as the case may be, advising on corporate transactions. In general, we are currently seeking to ensure clients who are looking at deals that involve or will impact upon a defined benefit scheme are aware of the Act and do at least consider whether it might be appropriate to assess the transaction as though the new regime already applies. It is not however as simple as taking a stance that parties must proceed in this way during the current transitional period before the Act becomes law. As is outlined above, there are still a number of uncertainties regarding the practical application of the Act and the most appropriate way to proceed will often depend on the specific circumstances of the transaction in question. Taking TPR at its word, it feels important to remember that the purpose of the Act is not to catch out or create unnecessary burden for schemes that are well-governed and well-advised and whose trustees and employers act appropriately; for the time being, therefore, our view is that it makes sense to be proportionate in terms of how to consider the terms of the Act for current transactions.

    In any event, going forward for proposals or events involving defined benefit schemes, it is clear that on the corporate side, legal advice should be sought at an early stage in relation to any proposed corporate transactions, restructuring or dividend payments to assess whether are any risks of these new provisions being triggered and, on a trustee side, when presented with any such proposals by the corporate sponsor, trustees should also seek their own legal advice and ensure they carefully consider and document any decisions taken.

    A final point to note is that TPR has just indicated in its recently published corporate plan that it will continue to prepare so it is fully equipped to use the new powers granted to it in the Act once they are in force. Therefore, it is clear that TPR is taking these new powers very seriously and that despite its repeated reassurances that it will not change its current approach to using its powers only to punish those who are intentionally trying to avoid pension scheme liabilities, whether that is adhered to in practice remains to be seen once the relevant provisions have had time to bed down.

    If you would like to discuss anything raised in this blog, please get in touch with a member of the pensions team or your usual contact at Brodies.


    Juliet Bayne