Link Pension Trustees fined £104,000 over McDonald’s scheme failures

James Phillips reports...

The Pensions Regulator (TPR) has handed Link Pension Trustees fines totalling £103,750 for multiple breaches of pensions law in relation to the McDonald’s Franchisee Pension Scheme.

The defined contribution (DC) master trust provides benefits for 148 members of staff at 32 McDonald’s franchises, but is independent from the overall McDonald’s corporation, and has seven active members.

The regulator’s Determinations Panel found Link had failed to obtain audited accounts for the scheme for four consecutive years, did not provide members with statutory money purchase illustrations (SMPIs) for two consecutive years, and failed to notify TPR of these breaches of law.

In its ruling, the panel said it would “have expected better of a corporate professional trustee”, and doled out a total fine of £73,750, noting the level of the fine was proportionate to the significance, repetition and nature of breaches, as well as the harm caused.

It said the fine should “send the right message… about the importance of these statutory obligations and thus promote the good administration of pension schemes in the future.”

The failures were uncovered after TPR contacted the scheme when it became aware that it fell under the definition of a ‘master trust’, as set out in the Pension Scheme Act 2017.

As a result of the investigation, the scheme was then fined a further £30,000 for failing to have at least three trustees on a master trust board as required by law.

This is the first instance of TPR using its enforcement powers in relation to failure to provide SMPIs, failure to report breaches of law, and failure to meet the minimum master trust trustee requirement.

The scheme has now resolved the breaches, paid the fine, and triggered its exit from the master trust market. It is one of 44 master trusts to exit or trigger its exit from the market since the authorisation regime came into force last year.

TPR executive director of frontline regulation Nicola Parish said the case highlighted the scrutiny in the regime.

“The good governance of pension schemes is closely linked to good outcomes for members, so running a scheme well is essential to ensure pension savers receive the retirement they deserve,” she said. “We will take action if the long-term protection of savings is put at risk.”