In the following guest post, Tristan Hall, Andrew Milne, and Emma Boulding of the CMS Cameron McKenna Nabarro Olswang LLP law firm take a look at the new UK Pension Schemes Act, and in particular review the Act’s liability provisions and D&O insurance implications. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to publish a guest post. Here is the authors’ article.




The protection of pension savers has become a hot button issue in the UK. The UK Government has responded by passing the Pension Schemes Act. The Pension Schemes Act creates new criminal offences relating to pension schemes which can be committed by any person, including a director or officer. It also enhances the powers of The Pensions Regulator. It should prompt consideration as to how D&O insurance could respond to claims against directors or officers arising out of these legislative changes.


The Pensions Regulator is the UK regulator of work-based pensions. It is a public body established by the UK Government.


The Pensions Regulator’s powers fall into three categories. Firstly, gathering information, including by issuing information-gathering “section 72” notices pursuant to the Pensions Act 2004. Secondly, regulatory and enforcement action, including the ability to impose civil and criminal sanctions. Thirdly, anti-avoidance action – this allows The Pensions Regulator to demand that an employer pay money into a scheme, either by issuing a contribution notice or a financial support direction.


In 2021, the UK Parliament passed the Pension Schemes Bill which was aimed at protecting defined benefit pension schemes and deterring wrongdoing in relation to pension schemes generally. The Pension Schemes Act which has now come into force includes new criminal offences which can be committed by company directors and officers, and broader powers for The Pensions Regulator.


Amongst the key changes are those set out below, which are intended to broaden the scope of The Pension Regulator’s existing powers:


  • The introduction of new criminal offences, designed to sanction those who put defined benefit schemes at risk, including “avoidance of employer debt” and “conduct risking accrued scheme benefits”. The penalties for these offences include up to 7 years imprisonment. Both offences apply to “any person” which would include company directors and offices. The new offences are broader in scope than existing criminal offences under previous workplace pension legislation.
  • The introduction of “punitive fines” of up to £1 million (c. $1.4 million) that can be imposed against those who commit criminal offences, including “any persons” who provide false and misleading information to The Pensions Regulator in relation to a “notifiable event” or fail to comply with a contribution notice. This would apply to company directors and officers.
  • Broader powers to facilitate information gathering. These encompass standalone powers for The Pensions Regulator to require individuals to attend interviews, and to respond to information requests. This would apply to company directors and officers as well as those who manage defined benefit schemes.
  • Less restrictions on the circumstances in which The Pensions Regulator can inspect a business’ premises and documents without a warrant. This applies to employers even where pension schemes are not administered out of their offices.


Defined benefit schemes are no longer the dominant form by which pension provision is made by UK employers in the private sector. However, they still account for £1.7 trillion (c. $2.4 trillion) assets and around 10.7 million scheme members, with scheme payments predicted to peak around 2020 to 2030. It is clear that protection of defined benefit schemes is seen as a key issue by the UK Government, given the public outcry when such schemes fail, and the financial consequences for members of such schemes.


Enforcement Action


Company directors and officers who do not take their obligations seriously in respect of pension schemes are likely to be subject of regulatory investigations, and potentially enforcement action. During the last financial year, The Pensions Regulator issued more than 48,000 fines, and exercised its enforcement powers in over 700 cases, including pursuing criminal proceedings against:


  1. A company director for failing to provide financial information as to investments made using monies from 16 pension schemes.
  2. The chief executive and chairman of a charity for defrauding a pension scheme out of more than £250,000 (c. $350,000).
  3. The managing director of a recruitment company for trying to avoid providing the company’s employees with a workplace pension.


The Pensions Regulator has also stepped in following the collapse of a number of well-known UK companies, including in the construction and retail sectors. It has taken action against individuals associated with those companies who failed to provide information about their pension schemes. It has issued contribution notices to individuals demanding they pay money into defined benefit schemes, in one case for £9.5 million ($ 13.4 million).


Impact on Directors and Officers and their Insurers


Recent cases such as these demonstrate The Pensions Regulator’s preparedness to take enforcement action against the directors of companies in addition to the trustees of pension schemes. The enhanced powers provided by the Pension Schemes Act are expected to lead to more enforcement action.


The costs of defending proceedings brought by The Pensions Regulator can be substantial. As proceedings often involve the exercise of its criminal powers, the consequences for company directors and officers can be severe, including substantial fines and prison sentences.


As pressure on scheme funding continues to increase, management of defined benefit pension schemes is likely to remain a key topic of boardroom conversation. With an ageing population, as well as volatile market conditions as a result of Covid-19 and the UK’s departure from the EU, it is likely that we will continue to see defined benefit scheme deficits (possibly alongside company failures).


Directors and officers should be aware of the increased level of scrutiny they may face personally, in light of the new sanctions and criminal offences. These are targeted at directors and officers, not just employers and pension trustees.


The changes to the law and increased public awareness may well lead to Insurers scrutinising companies with large defined benefit schemes, particularly those in deficit and which are operating in challenging trading conditions.  Consideration will need to be given as to the scope of cover afforded for actions brought by The Pensions Regulator using its new powers and how they fall for consideration under conventional D&O liability insurance policies and potentially the interaction with any coverage afforded under pension trustee liability insurance.