Watchdog should tread carefully

Pensions Act: A series by Stephanie Hawthorne

The regulation of company pension schemes has been a contentious subject since Robert Maxwell, the media tycoon, tumbled off his yacht in 1992 with more than pounds 400m of his employees' pension funds unaccounted for.

His death and the much-publicised fate of the Maxwell pensioners led to the Pensions Act and with it the formation of the Occupational Pensions Regulatory Authority (Opra), the regulatory body for more than 200,000 occupational schemes. Opra has draconian discretionary powers with a punishment for every transgression.

Harriet Dawes, a partner at Lovell White Durrant, pensions law experts, said: "Opra is being set up as a third line of protection for members and schemes." The trustees have the primary responsibility for seeing that all is well. They will rely on expert advisers, including actuaries and auditors, who must "whistle-blow" to Opra in certain circumstances if the rules are broken.

Scheme members who are worried that something is wrong can contact Opra or talk to Public Concern at Work. This is a charity which giveslegal help to people who are worried that something iswrong in their workplace.

Opra's powers are statutory and are laid out in the Pensions Act. It has inspectors similar to those of the Department of Trade and Industry, who will be able to obtain warrants to enter and search premises to examine people and require them to produce documents and publish reports of investigations.

One of Opra's chief duties will be financial supervision. It must be informed if there are failures to comply with the requirement to pay scheduled pension contributions, if the minimum funding requirement - the amount of assets each fund must have should it be wound up - is not met and in other circumstances.

Opra can remove trustees for any serious or persistent breach of the rules and appoint new ones. It can even wind up a pensions scheme. Indeed, its very powers lead some pensions experts to warn that the watchdog should not come down too hard on errant schemes, at least for a while.

Stewart Ritchie, a pensions expert at Scottish Equitable, says: "I hope it will not throw the book at people whose only crime is to inadvertently fail to satisfy some detail of the immensely complex pensions law. Unless Opra can perform its functions efficiently and effectively, the trend away from occupational to personal pensions can only accelerate."

Similarly, Oliver Rowlands, director of Alexander Clay trustee services practice, warns: "Opra must adopt a sensitive approach if the new system is to work, otherwise trustees may simply call it a day."

John Hayes, Opra chairman, is prepared to let the Act, which came into force last month, settle down for a while before baring his teeth.

He said: "People will make mistakes, particularly in the first six months to one year and we understand that. These will not necessarily lead immediately to civil penalties. Any sign of dishonesty will be treated with the utmost severity."

If individuals want to secure their pension rights, the Occupational Pensions Advisory Service (Opas) and the Pensions Ombudsman will remain, after the trustees, their second port of call.

This expensive new layer of protection will be paid for by a levy of members so the pension scheme will have to foot the bill. From April 1997 levies will be significantly larger and payable annually rather than once every three years. Andrew Scrimshaw, pensions research manager, Sedgwick Noble Lowndes, says that from 1997 there will be a general levy and a compensation levy (largely post-event) to pay for Opra and the compensation board.

Personal pensions will be exempt from the compensation levy and pay a smaller general levy because they are not covered by Opra. The Government anticipates that the general levy will bring in pounds 12m a year. Mr Scrimshaw warns that levies could be expected to increase at least sevenfold and even more for pension schemes with a high percentage of pensioners. If it helps avoid another Maxwell scandal, that may be a cheap price to pay.

A free booklet "Spotlight on Opra" and a fact sheet "A problem with your company pension scheme?" are available from the Opra Helpdesk, phone 01273 627600. Public Concern at Work, phone 0171 404 6609.

Stephanie Hawthorne is the editor of Pensions World

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
theatre
Sport
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
News
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
tv
News
i100
Travel
travelGallery And yes, it is indoors
Life and Style
tech
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
News
i100
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Finacial products from our partners
Property search

Scottish independence: How will kilt-edged stocks fare?

Scottish companies were caned when the separatists surged in the polls. Is this the future, asks Simon Read, and would they be any better together?

Two million first-time buyers are locked out

The drought in lending to people with low deposits has created legions of frustrated buyers, writes Emma Lunn

Leaving money to charity in your will could help reduce the tax bill for your loved ones

Next week has been designated "remember a charity in your will week", to put the focus squarely on the subject
Money is slipping through our fingers: the UK is falling behind other countries in the amount we put away

How to save money: UK is crashing down the European league table for putting money away

The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options

Energy firms found guilty of bad practice could have licences revoked under Labour government

Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator

A student's guide to financial survival: You don't have to drown in debt at university

Fresh from A-level delight, the moment does not have to be soured by students resigning themselves to thousands of pounds worth of debt in three years' time. Rob Griffin sees how to pass the university challenge

'Dismal' eurozone data sparks concerns

European Central Bank chief Mario Draghi is under pressure to launch promised stimulus before the EU slides further
Love but not marriage: property is one area where cohabiting couples are in danger of losing out

How couples can protect their financial interests when cohabiting

People who simply live together cannot assume they have the same rights to each other's assets as spouses or civil partners. Michelle McGagh sees how they can protect their financial interests
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    IT Project manager - Web E-commerce

    £65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

    Trainee / Experienced Recruitment Consultants

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

    Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

    Robert Fisk on Syria air strikes

    ‘Peace President’ Obama had to take stronger action against Isis after beheadings
    Will Lindsay Lohan's West End debut be a turnaround moment for her career?

    Lindsay Lohan's West End debut

    Will this be a turnaround moment for her career?
    'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

    The follow-up to 'The Tiger Who Came to Tea'

    Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
    BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

    BBC Television Centre

    A nostalgic wander through the sets, studios and ghosts of programmes past
    Lonesome George: Custody battle in Galapagos over tortoise remains

    My George!

    Custody battle in Galapagos over tortoise remains
    10 best rucksacks for backpackers

    Pack up your troubles: 10 best rucksacks for backpackers

    Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
    Secret politics of the weekly shop

    The politics of the weekly shop

    New app reveals political leanings of food companies
    Beam me up, Scottie!

    Beam me up, Scottie!

    Celebrity Trekkies from Alex Salmond to Barack Obama
    Beware Wet Paint: The ICA's latest ambitious exhibition

    Beware Wet Paint

    The ICA's latest ambitious exhibition
    Pink Floyd have produced some of rock's greatest ever album covers

    Pink Floyd have produced some of rock's greatest ever album covers

    Can 'The Endless River' carry on the tradition?
    Sanctuary for the suicidal

    Sanctuary for the suicidal

    One mother's story of how London charity Maytree helped her son with his depression
    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world