Clifford Chance

UK Pension Schemes Act: Lenders Beware

1 March 2021

On 11 February 2021, the Pension Schemes Bill received Royal Assent and became the Pension Schemes Act 2021 (the "Act"). One of the key changes introduced by the Act in relation to defined benefit pension schemes is a new criminal offence for anyone engaging in conduct that detrimentally affects in a material way the likelihood of accrued scheme benefits being received. There are no specific exceptions for lenders or loan transactions where there is a defined benefit pension scheme in the borrower group. So, lenders need to become familiar with the new regime and be able to navigate the risks posed.

The new offence is not yet in force (expected to occur at some point this year) and it is hoped that Pensions Regulator guidance soon to be consulted upon will offer some insights into the types of circumstances in which it expects to use its new powers. Despite some positive sound bites already from the Regulator that it will use its powers sparingly, the powers in the Act are drafted widely. Now the Act has Royal Assent it's a good time for lenders to take stock of the new regime and what happens next, which we touch on below. 

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