COMMONS

Pensions still at risk while Government continues to consult

19 March 2018

In December 2016 the Work and Pensions Committee published a report on defined benefit pension schemes and the new powers needed for The Pensions Regulator to protect pension savers from "another BHS" scenario, including "nuclear deterrent" fines and stronger powers over corporate deals that might threaten the solvency of a company pension scheme.

Strengthen The Pensions Regulator's powers

The Committee now welcomes the inclusion of these measures, and others intended to strengthen The Pensions Regulator's hand, in the White Paper published today (19 March 2018).

Although the White Paper appears to leave room for the deterrent fines to be applied immediately – another very welcome move - the legislation needed to enact the new regime in full will not happen before 2019-20 at the earliest. In the meantime, with Government proposing to consult further, pension rights are still at risk from unscrupulous businesses seeking to avoid their pension obligations. 

Chair's comments

Rt Hon Frank Field MP, Chair of the Committee, said:

"I very much welcome the announcements of new powers called for by the Committee. But for these measures to be an effective deterrent to the minority of employers wanting to shirk their pension obligations, there has to be a credible threat of them being deployed in full and at speed.

This has been the problem with existing pension regulation powers, which laid largely dormant while the pension schemes at BHS and Carillion unravelled, with who knows how many more like them still waiting in the wings.

This is a particular concern with the headline measure of criminal responsibility for directors. We saw similar steps in the light of the banking crisis but have yet to see any senior figures banged up."

Consistency of approach

Responding to the Government's rejection of introducing a deemed consent system in the light of the British Steel case, the Chair added:

"The Government has had a huge success with auto-enrolment. Deemed consent in cases such as British Steel follows the same principle. Members are entirely free to choose but if, for whatever reason, they do not exercise that choice, they are defaulted into the option most likely to be in their financial interests.

In the case of British Steel, 25,000 members were, in effect, defaulted into the PPF. In many cases this would have been against their interests.

We are not calling for a change of Government approach to pensions, more a consistency of approach. Should any more cases like British Steel come along – and I have every expectation they will – we will no doubt revisit these arguments."

Further information

Image: iStockphoto

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