Under the proposals, an employer who wilfully failed to properly fund a pension could face an ‘unlimited’ fine and a potential prison sentence. But because this would be a criminal rather than a civil offence, this raises the standard of proof required and could therefore make it harder to find anyone guilty. In addition, the focus on this issue means that other ways of making sure that pensions get paid, such as making it easier for smaller pension schemes to combine into bigger and better run schemes, are still in the early stages of consultation.
Steve Webb, Director of Policy at Royal London said: ‘Threatening to lock people up grabs the headlines which is why this is the third time that it has been announced. But a criminal offence has a high burden of proof which could mean that the ‘bad guys’ simply get away with it. Even if this measure is included in a Bill in next year’s Queen’s Speech it will be 2020 before it comes into effect and it is doubtful if anyone will ever be convicted. In the meantime the government has made little progress on the more fruitful area of helping pension schemes to combine to achieve the benefits of scale. It should be focusing on practical changes that could make a real difference rather than gesture announcements like this.’
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