Directors who allow company pensions to spiral out of control could be prosecuted under proposed new criminal legislation.
The Department for Work and Pensions (DWP), which published the report, said it plans to introduce a new criminal offence of ‘wilful or reckless behaviour’ in relation to pensions in a bid to crack down on abuse of final or average salary schemes.
The regulator said the new legislation will be introduced in response to recent reports of company bosses allowing deficits to escalate to unsustainable levels or endangering workers’ savings through “chronic mismanagement”.
Commenting on the announcement, Secretary of State for Work and Pensions Amber Rudd suggested that the Government aims to avoid a repeat of recent scandals like BHS or Carillion.
In March 2015, department store BHS was sold for just £1, which ultimately led to the loss of 11,000 jobs and left a pension deficit of around £571 million.
“The vast majority of bosses take their responsibilities seriously and look after their workers’ retirement funds,” said Ms Rudd.
“However, for too long the reckless few playing fast and loose with people’s futures have got away scot-free. Acts of astonishing arrogance and abandon punished only with fines, barely denting bosses’ bank balances.”
She added: “Workers who have done the right thing and saved for retirement, confident their investments were safe, are left facing a leaner later life.
“That cannot be right, which is why, for the first time, we’re going to make wilful or reckless behaviour relating to pensions a criminal offence.”
Under the proposed legislation, company bosses could receive unlimited fines and prison terms of up to seven years for the worst offenders.