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

News
people
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
i100
Sport
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
boxing
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

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    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
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments