The pensions minister has confirmed sweeping the new regulatory powers which can compel companies or individual to make additional pension contributions will not be applied retrospectively.
This powers have been awarded to The Pensions Regulator as part of the new pension schemes bill.
But there had been concerns across the industry that these powers could have a retrospective effect, being used to challenge decisions made long before the bill was put into law.
But in a written parliamentary answer Guy Opperman, pensions minister confirmed that none of the provisions in part 3 of the bill, which concerns the new and widely-drawn powers to issue ‘contribution notices’ will be applied retrospectively.
More specifically, Opperman says that the powers will only apply to “schemes where the act occurs, or in the case of a series of acts commences, after the powers come into force”.
The news has been welcomed by LCP partner and head of research David Everett.
He says: “The ministerial statement is very welcome news and is consistent with how previous powers in this area were introduced.
“Corporate decision makers should not be in a position of facing new penalties for actions taken in the past”.
But Everett said that the industry still needed further guidance on how the new powers will be used, and in particular on how having a ‘material impact’ on pension scheme funding will be defined.
He adds:“What is disappointing is that there is no undertaking that the Regulator will provide guidance on the new contribution notice tests. But it will surely need to, in order to explain when certain ‘materiality’ provisions of the legislation are likely to operate.”