Protecting Workplace Pensions in South Derbyshire

Heather Wheeler, MP for South Derbyshire, has welcomed government plans to crack down on bosses who recklessly put workers’ pension pay-outs in jeopardy. The new measures would give workers the assurances they needed that their future retirement savings are safe if a company fails.

The White Paper “Protecting Defined Benefit Pension Schemes” laid before Parliament on Monday, 19th March 2018 would make it a criminal offence to neglect pension responsibilities and could see businesses hit with fines or even prison sentences for individuals if they fail to meet their duty. The move comes in the wake of the collapses of BHS and Carillion.

There are more than 10.5 million Defined Benefit Pension scheme members in the UK with most employers doing the right thing so that 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.

A Defined Benefit Pension is where the employer promises a specified pension payment, lump sum or combination on retirement. It is predetermined by a formula based on earnings, length of service and age, rather than on individual investment returns.

Under the changes the Pensions Regulator will be given more powers to get the information it needs 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.

Commenting on the announcement, Heather said:

“South Derbyshire businesses are doing their very best to ensure they can grow and prosper but they also have a responsibility to their employees to meet their pension promise.

I am very pleased that the Government has listened and is introducing penalties for companies that neglect their duties to their pension schemes. This will act as a deterrent and reassure workers that the Government is taking action to protect their pensions.”

The Secretary of State for Work and Pensions, the Rt. Hon. Esther McVey MP said:

“Up and down the country the vast majority of employers are doing the right thing and acting in the best interests of their staff.

But we have seen what can go wrong; therefore we will clamp down on and - where appropriate - punish directors who wilfully or recklessly put pension schemes at risk. It is right that those responsible face tougher sanctions and we need to make sure that the Pensions Regulator has the powers in place to act swiftly when action is needed.”

The White Paper comes after a wide-ranging consultation with workers, employers and the pensions industry. Other initiatives will support consolidation of Defined Benefit Pension schemes, making them more efficient and improving governance.