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Pensions Dashboards (Prohibition Of Indemnification) Act 2023

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Legal background

  1. Section 256(1)(b) of the Pensions Act 2004 (No indemnification for fines or civil penalties) provides that no amount can be paid out of the assets of an occupational or personal pension scheme for the purpose of reimbursing, or providing for the reimbursement of, any trustee or manager of the scheme in respect of a penalty which they are required to pay under or by virtue of a list of specific statutory provisions.
  2. Section 1(1) (No indemnification for penalties under pension dashboards regulations) of the Act adds section 238G of the Pensions Act 2004 to this list. Section 238G (inserted into the Pensions Act 2004 by the Pension Schemes Act 2021) is the power under which compliance provisions can be made in pensions dashboards Regulations i.e. penalty notices, to ensure certain requirements on trustees or managers of relevant occupational schemes as to cooperation, connection and the provision of information are complied with (see paragraph 6 above regarding penalties).
  3. By virtue of the amendment in section 256(1)(b) of the Pensions Act 2004 by section 1(1) of the Act prohibiting indemnification for penalties under pensions dashboards regulations, other provisions in section 256 also apply in respect of these dashboards penalties, including:
    1. Where a trustee or manager of an occupational pension scheme is reimbursed out of the assets and knows or has reasonable grounds to believe they have been reimbursed, unless they have taken all reasonable steps to secure that they are not so reimbursed, they are guilty of an offence (section 256(4)). A person guilty of an offence is liable on summary conviction, to a fine not exceeding the statutory maximum and on conviction on indictment for a term not exceeding two years, or a fine, or both (section 256(5)).
    2. Where any amount is paid out of the assets in contravention of this prohibition, section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance (section 256(3)).
  4. Section 1(2) of the Act makes corresponding amendments to article 233(1)(b) of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I.1)) by adding article 215G of that Order to article 233(1)(b).

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