Pensions Regulator needs stronger powers, MPs say
MPs have called for the Pensions Regulator to be given much stronger powers to thwart rogue employers who fail to support their pension schemes.
The Commons Work and Pensions Committee says the regulator should have the power to impose "punitive fines" of as much as £1bn.
Following the collapse of the BHS pension scheme, the MPs say the regulator itself needs to be reformed.
Specifically, it should intervene much earlier if a scheme is in trouble.
"It is difficult to imagine the Pensions Regulator would still be having to negotiate with Sir Philip Green [former owner of BHS] if he had been facing a bill of £1bn, rather than £350m," said Frank Field, who chairs the committee.
"He would have sorted the pension scheme long ago. The measures we set out in this report are intended to reduce the chance of another scheme going down the BHS route," the MPS added.
"We hope and expect that we will never again see a company like BHS be able to come up with a 23-year recovery plan for its pension fund, and certainly not that it would take the regulator two years to really begin to do anything about it," he added.
'Prevent another BHS'
Mr Field has been running a vigorous campaign against Sir Philip over the wealthy retailer's apparent reluctance to put sufficient of his own money into a rescue of the BHS pension scheme.
The fund was left with a huge deficit of £571m when BHS went bust in April this year with the loss of 11,000 jobs, just over a year after Sir Philip had sold the department store chain to a former bankrupt, Dominic Chappell, for just £1.
The pensions regulator has demanded that Sir Philip pay £350m into the BHS pension fund to ease the worries of its 20,000 members.
As well as criticising Sir Philip and Mr Chappell, MPs have also accused the regulator of being slow to act when faced with evidence of a pension scheme with a large deficit and an employer reluctant to shoulder its obligations.
Drawing on its inquiries into the saga, the Work and Pensions Committee has come up with a series of proposals to strengthen the hand of the regulator and scheme trustees if a pension scheme is heading for trouble:
- scheme valuations and recovery plans should take no more than nine months to devise
- the pensions regulator should intervene sooner if it has concerns
- pension scheme recovery plans should not be longer than 10 years
- the regulator should have the power to decide if a company takeover or sale might damage a pension scheme's finances
- scheme trustees should have enhanced powers, including the option to reduce the level of inflation proofing that a scheme offers
- they would also give the trustees the power to demand more information from an uncooperative employer.
Mr Field said: "It is inconceivable that Sir Philip Green's deal to dispose of BHS and its giant pension deficit for £1 to a dismally unqualified man, with no plan for the pension schemes and no means of financing one, would have evaded or passed any mandatory clearance scheme.
"To prevent another BHS we need to have the means to nip inevitable disasters like this one in the bud."
A Department for Work and Pensions spokesperson said the government would publish a Green Paper on pension funding next year and examine the powers of the pensions regulator.
The regulator's chief executive, Lesley Titcomb, welcomed the MPs' report.
"We continue to discuss options with [ministers] for the legislative and regulatory framework for workplace pensions, and how this might be improved."