Enforcement options

Published: 25 October 2022

Types of enforcement powers

1. There is a range of enforcement options available to us, which can broadly be divided into regulatory, penalty, civil and criminal powers.
   • Regulatory powers – These are powers given to us by statute, which allow us to take regulatory action, for example by issuing statutory notices, giving directions and making orders.
   • Penalty powers – These are regulatory powers that we can use to impose a fine on a person in circumstances where they have breached pensions legislation (for example see our monetary penalties policy) or done anything else where a financial penalty applies (for example see our avoidance high fines policy).
   • Civil powers – These are powers that we can ask the civil courts to use, such as the power to order an injunction or to order that assets are restored to a scheme.
   • Criminal powers – These are powers used in the criminal courts where we act as prosecutor, either through specific pensions legislation where we are a designated prosecutor (for example see s58A and s58B criminal offences policy) or where we can act as a private prosecutor.
2. Some of these powers can be exercised by our staff, some by the Determinations Panel (a TPR committee established by statute that operates separately from our enforcement team) and some through the civil or criminal courts. See the enforcement procedures section of this policy.

Regulatory powers

Statutory notices

3. These direct a person to do something or take certain steps or refrain from acting in a particular way and may be required to be completed within a specified timeframe.
4. There are specific rules governing the use of different statutory notices, and we consider the circumstances in each case when deciding the most appropriate course of action to take. Examples of statutory notices we can issue include:
   • an improvement notice requiring a person to take (or refrain from taking) specific actions within a certain time
   • a third-party notice requiring a person to take (or refrain from taking) specific actions which result in a breach of pensions legislation
   • a report notice requiring a person (normally the trustees or employer of a pension scheme), at their own cost, to provide us with a report from a suitably skilled person on a particular matter
   • contribution notices issued under our anti-avoidance powers
5. Failure to comply with such a notice may lead to financial penalties and/or criminal sanction.

Anti-avoidance powers

6. Our anti-avoidance powers (also known as our ‘moral hazard’ powers) enable us to take action to protect members’ benefits and the Pension Protection Fund. In certain circumstances, we can use these powers against an employer with a defined benefit scheme, or persons connected or associated with such an employer.
7. We have the power to issue a contribution notice under s38 of the Pensions Act 2004 against such an employer or an associated or connected person, requiring them to pay a cash sum to a scheme (or in some circumstances, to the PPF), where the legislative conditions are met.
8. Where relevant, we take code 12 (contribution notices: circumstances in relation to the material detriment test, the employer insolvency test and the employer resources test) into account. You can read more in our code 12 guidance. We have the power to issue a financial support direction (FSD) under s43 against persons connected or associated with the scheme employer, or in some instances the employer themselves.
9. The targets of a FSD are required to put in place financial support for the scheme. The type of financial support is not specified in the FSD and could include, but is not limited to, cash, a guarantee, a change to the statutory employer, other security or any combination. If the targets fail to provide this support, we have the power to issue a contribution notice under s47 of the Pensions Act 2004 which requires them to pay cash to the scheme, or in some circumstances, the PPF.

Scheme funding powers

10. We have a number of powers under Part 3 of the Pensions Act 2004 that can be used where issues arise in connection with the funding of a DB scheme, including:
    • the power under s228 of the Pensions Act 2004 to fine an employer who fails, without reasonable excuse, to make a payment required under a schedule of contributions
    • the power under s231 of the Pensions Act 2004 to modify a scheme as regards future accrual of benefits, direct how its technical provisions are to be calculated, direct how any failure to meet the statutory funding objective is to be remedied or impose a schedule of contributions.
11. The powers under s231 of the Pensions Act 2004 can only be used in certain circumstances, for example:
    • where the trustees or managers have failed to comply with requirements when preparing their technical provisions, statement of funding principles, recovery plan, or schedule of contributions
    • the trustees or managers have failed to obtain an actuarial valuation when required to do so
    • the scheme actuary is unable to certify the scheme’s technical provisions or schedule of contributions
    • the employer has failed to make payments in accordance with the schedule of contributions and the failure is of material significance
    • the trustees or managers have been unable to agree the technical provisions, statement of funding principles, recovery plan, or schedule of contributions within the timeframes required
12. When using our s231 powers, we will also consider our statutory objective of minimising any adverse impacts on the sustainable growth of the scheme employer.

Other regulatory enforcement options

13. We have other regulatory powers which allow us to intervene with regard to pension schemes where we identify issues of concern, and which we may use in isolation or in conjunction with other enforcement action. For example, we may become aware of circumstances that cause us to question whether someone is ‘fit and proper’ to be a trustee of a pension scheme. We will want to consider the matter and decide whether to appoint an independent trustee, suspend the trustee, or issue a prohibition order in relation to a specific scheme or all schemes using our powers under the Pensions Act 1995. Please read prohibition orders for more information.

Financial penalties

14. We have powers to impose financial penalties in a wide range of circumstances.

Discretionary penalties

Standard penalties

15. Most of our fining powers are discretionary. Penalties for breaches of pensions legislation or other duties may be imposed by our executive officers or by our Determinations Panel. Examples include:
    • our power to impose penalties under s10 of the Pensions Act 1995 (a Determinations Panel power), and
    • our executive power to impose penalties for breaches of statutory restrictions on charges under regulation 28(1) of the Occupational Pension Schemes (Charges and Governance) Regulations 2015 and governance requirements relating to chair statements in Part V of the Occupational Pension Schemes (Scheme Administration) Regulations 1996.
16. The maximum amount of a penalty for each breach under these provisions is £5,000 in the case of an individual and up to £50,000 in any other case.
17. For more information on our approach to issuing these fines please refer to our monetary penalties policy.
18. Some penalty notices must specify the joint and several liability of the parties to whom they are issued.
19. In addition to the imposition of a penalty, we expect the underlying breach to be remedied. We may follow up a penalty with an investigation and the use of our other powers which may result in further penalties for continued non-compliance.

High fines

20. We have the power to impose a financial penalty of up to £1 million in certain circumstances.

Avoidance:

21. Where a person:
    • has failed, without reasonable excuse, to pay a debt due under a contribution notice, or
    • has been party to an act or failure to act which:
      • had a main purpose of avoiding an employer debt to a pension scheme, or 
      • had a materially detrimental effect on the likelihood of scheme benefits being recovered, and they knew or ought to have known that that their act or failure would have that effect,
      • and in either case it was not reasonable for them to act or fail to act in the way that they did
      we may ask the Determinations Panel to impose a penalty of up to £1 million.
      For more information about our approach to calculating these fines, please see our high fines policy (avoidance).

Information requirements:

22. Where a person:
    • has failed, without reasonable excuse, to comply with the requirements of the notifiable events regime
    • has knowingly or recklessly provided false or misleading information to us
    • has knowingly or recklessly provided false or misleading information to trustees in particular circumstances.
    we may ask the Determinations Panel to impose a penalty of up to £1 million.
    For more information about our approach to calculating these fines, please see our high fines policy (information requirements).

Fines for non-compliance with information-gathering powers

23. If a person fails to comply with our information-gathering powers, we have a range of enforcement options available, including fines and/or criminal prosecution.
24. You can read more about these fining powers in the investigations section.

Mandatory penalties

25. We are legally required to impose a mandatory penalty in two situations:
    • Under the Occupational Pension Schemes (Charges and Governance) Regulations 2015, where we receive an indication in the scheme return or otherwise form the opinion that there has been a failure to prepare a chair’s statement (the minimum penalty must be at least £500 and must not exceed £2,000).
    • Under the Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021, where we form the opinion that a person has failed to publish a climate change report on a publicly accessible website, free of charge, within the timeframe, when they are required to do so (the minimum penalty is £2,500).
26. We have to issue a penalty notice in these circumstances. The fact the penalty is mandatory reflects the importance and significance of compliance.
27. Trustees are required to confirm on each scheme return that they have prepared a chair’s statement within the statutory timeframe, and to provide details of the website address where they have published their climate change report (if they are required to produce one).
28. In forming the opinion that there has been a breach, we consider the relevant evidence and investigate further as necessary.
29. If the scheme return is not completed, we take appropriate action to obtain the information we need in relation to the scheme, and to ensure that trustees are complying with their obligations more generally.

Further information

You can find more detailed information on how we approach exercising our powers to impose mandatory financial penalties in our monetary penalties policy.

See further information on debt recovery.

Criminal powers

30. There are a number of criminal offences concerned specifically with workplace pensions, such as contravention of the restrictions on employer-related investments or the providing of false/misleading information to TPR which we have the power to prosecute. Unless otherwise restricted to designated prosecuting authorities, we can also prosecute other offences that are otherwise related to our functions. An example would be fraud by abuse of position.
31. In circumstances, where we uncover evidence of criminality that is not connected to our functions, or where we are not the designated prosecutor, we pass this to the appropriate law enforcement agency, who then determines whether to take the matter forward.
32. Where the subject of one of our investigations is also of interest to another agency or prosecutor, we usually liaise with them before deciding whether an investigation or any prosecution should be carried out by us, the other agency or prosecutor, or whether a joint investigation or prosecution is appropriate.
33. The use of our criminal powers is reserved for the most serious behaviour and is intended to provide a more severe punishment for the person responsible and to deter further offences.
34. For further information please refer to our prosecution policy. and to our criminal offences policy.

Civil powers

35. In addition to our regulatory, penalty and criminal prosecution powers, there are statutory powers which can only be pursued in the civil courts, such as:
    • our power to seek an injunction to restrain a person under s15 of the Pensions Act 2004 where there has been, or there is a reasonable likelihood there will be, a misuse or misappropriation of scheme assets
    • our power to seek restitution of scheme assets under s16 of the Pensions Act 2004 for the purpose of restoring those who were affected to the position they were in before the misuse or misappropriation of assets occurred.

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