TPR fines 2020 Trustees £4,000 for chair statement failures

James Phillips writes

Professional trustee firm 2020 Trustees was fined £4,000 for failing to produce two chair’s statements between July and September 2017, The Pensions Regulator (TPR) has revealed.

The fines relate to the Cornwall Farmers Limited Retirement Benefits Plan and The Pera International Staff Pension and Life Assurance Scheme, according to a list compiled by TPR.

The firm, which was last week acquired by Broadstone Group, received a £2,000 fine for each scheme, which is the maximum allowed for chair’s statement failures.

2020 Trustees chief executive Antony Miller said in an emailed statement that the failures were “technical breaches” and no members were impacted.

“We have been in extended contact with the regulator over these fines as we do not believe they are justified,” he said. “2020 is extremely diligent with chair’s statements and the fines we have received from the regulator were for technical breaches in specific cases, where such statements should not really have been required. No member has been adversely affected as a result.”

He stated the defined contribution (DC) section of the Pera scheme had been wound up and transferred to a master trust and therefore no chair’s statement was required, which the regulator agreed with, yet a technical breach meant the scheme had to be fined £2,000.

“This is an unfortunate event but is essentially a reflection of poor drafting within the law,” Miller continued. “The position with Cornwall Farmers was similar. The chair’s statement added no value and 2020 had been advised that it was not required. The regulator again said that it was technically required even though it added no value. 2020 has since been reimbursed by the consultant.

“It is a pity that the law has been poorly drafted and fines are being issued in such circumstances, where members have not been affected (or indeed where there are no members). The regulator however has to do as it believes the law requires.”

Named and shamed

This is the second time the regulator has published a list of schemes for failing to meet this “basic” duty, after it revealed in Q2 that PTL Governance, Pitmans Trustees, and MC Trustees had previously failed in this regard.

The fines were two of 18 the watchdog issued in relation to chair’s statements during the period, it revealed in its compliance and enforcement bulletin for Q3.

Another 37 fines, totalling £29,900, were issued to trustees in cases of schemes failing to submit their annual return to the regulator on time.

The bulletin also notes TPR secured its first successful tribunal decision related to a scheme’s failure to keep information up-to-date on the regulator’s online register.

In this case, a £300 fine was issued after a DC plan failed to complete its scheme return, and then was later found to have wound up without informing TPR.

The watchdog added it was also getting tougher where defined benefit (DB) schemes fail to submit their triennial valuations and recovery plans on time, by issuing improvement and third-party notices to three sets of trustees and employers during the quarter. These notices can result in a fine of up to £50,000.

AE non-compliance

The report also revealed a surge in the number of compliance notices issued to employers relating to auto-enrolment (AE) duties in the quarter.

There were 21,753 cases of AE powers being used, up 32% since Q2, with 5,479 fixed penalty notices (FPN) and 1,433 escalating penalty notices (EPN) issued. Both figures were new records, and increased by 14% and 3% respectively since the last quarter.

In total, 169 employers were taken to court for failing to pay an EPN during Q3, with more than £1.25m of fines issued. The largest fines of £52,500 apiece were given to Cromwell Care Home, and R and B Services.

Another 13,752 compliance notices were issued, making up 22% of all notices issued since 2012, and a 48% increase on the last quarter.

However, of the 1,479 completed reviews of compliance notices, FPNs and EPNs in the quarter, over two-thirds (1,030) were then revoked, substituted or varied, the bulletin revealed.

A further 753 unpaid contribution notices were issued, up from 653 in Q2, the report also revealed.

TPR director of AE Darren Ryder warned employers need to ensure they meet their duties on an ongoing basis.

“It is not enough to just comply with AE enrolment laws by signing staff up to a scheme,” he said. “Employers must also meet their duties to contribute into their employees’ pensions every month.

“Clearly 753 employers not paying contributions is a very small proportion of those that are compliant – less than 0.1%. But every employer that is failing to make payments into their staff’s pension pot is one too many. We will not let employers get away with failing to meet their duties and we will take action.”

A total of 46 tribunals were conducted in regard to penalty notices applied under TPR’s AE powers, with 39 confirmed by the Tribunal Service, and seven revoked, substituted or varied.