Following the revelation of new powers for The Pensions Regulator, several retirement and pension experts have questioned their effectiveness. The Department for Work & Pensions (DWP) published a consultation paper on new rules for the defined benefit (DB) sector, which will see company bosses who endanger their staff final salary plans facing a fine of up to £1m, which is a new civil penalty for more serious offences.
Frank Field however, the chair of the Work and Pensions Select Committee has questioned the value of the new penalty.
"The accountancy profession must have been in charge of drafting this section of the paper, as it appears they have misplaced a decimal point. The likes of Sir Philip Green need to be fined a billion, not a million, if the regulator is to have a deterrent effect."
Malcolm Mclean, the former head of The Pensions Advisory Service and now a leading pension consultant also questioned the effectiveness of the new powers for the Regulator, saying that the government's consultation "leaves many things up in the air as to how the regulator's new powers might be applied in practice and whether they will be effective."
He said: "In particular the proposal to create a criminal offence of 'reckless' behaviour towards a pension scheme could prove problematic."
"How will legislation define 'recklessly' and how will this be interpreted by the courts? It may take a couple of failed prosecutions before we find out."
Commenting on the consultation, Janet Brown, who is a partner at law firm Sackers who specialise in pensions law said that "the likely impact of the new powers will be highly dependent on careful and clear drafting, so as to avoid any unintended consequences."
She said: "TPR's resources, and its ability and appetite to use its new powers, will also be crucial in determining their ultimate effectiveness."
"It therefore remains to be seen whether the government's proposals will help the regulator in fulfilling its new 'clearer, quicker and tougher' mantra."