The government is to introduce a new criminal offence of ‘wilful or reckless behaviour’ in relation to pensions which would see directors facing up to seven years in jail. In its response to a consultation on protecting defined benefit contribution pension schemes, which ran from June to August last year, the government said it will introduce two new criminal offences to prevent and penalise mismanagement of pension schemes.

The first will target individuals who wilfully or recklessly mishandle pension schemes, endangering workers’ pensions, by such things as chronic mismanagement of a business; or allowing huge unsustainable deficits to build up; or taking huge investment risks; or a combination thereof.

The second, which will attract an unlimited fine, will target individuals who fail to comply with a contribution notice, which is issued by The Pensions Regulator requiring a specified amount of money to be paid into the pension scheme by that individual. There will be a new civil penalty of up to £1m for this offence.