MPs recommend bigger fines for bosses avoiding pension responsibilities
- Credit: PA
Bosses like Sir Philip Green should face 'nuclear deterrent' punitive fines for avoiding pension responsibilities to avoid a BHS-style 'disaster' happening again, an influential group of MPs has said.
MPs said the regulator should have the power to impose fines that could treble the amount payable towards covering a pension scheme deficit.
The power would act as such a strong deterrent to avoiding responsibilities that it would never have to be used in practice, the committee's report on defined benefit pension schemes said.
The inquiry, which was originally set up to investigate the collapse of BHS and its implications for the pension fund, also received evidence about the sale of Norfolk-based Turkey producer to 2 Sisters Food Group owner Ranjit Boparan earlier this year.
A report from University of Essex professor Prem Sikka to the committee suggested the pension deficit could have risen to £20m and it is unlikely that more than 1% of this, or debts to unsecured creditors, will be paid.
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Norfolk MP Keith Simpson has called for the buyer and seller of the company to appear in front of the committee. But the committee did not call any witnesses related to the business.
In the report published today the cross-party committee made a number of other recommendations for the regulation of pension schemes.
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It noted that companies are making less use of the voluntary practice of seeking TPR clearance during major transactions, with just nine cases in 2015-16 compared to 263 in 2005-6.
A move towards mandatory clearance would avoid the situation that arose when Sir Philip sold BHS and its pension deficit for £1 to the 'dismally unqualified' serial bankrupt Dominic Chappell, committee chairman Frank Field said.
The risk-based levy charged by the insurance 'lifeboat' for collapsed pension funds, the Pension Protection Fund (PPF), should be recalculated to incentivise good corporate behaviour and avoid the 'moral hazard' of irresponsible companies ducking their liabilities, the committee said.
And pension fund trustees should be given new powers to take decisions in the interest of scheme members, including being able to negotiate restructuring that result in better than PPF outcomes, the committee suggested.
A Department for Work and Pensions spokesman said: 'The majority of employers are managing their pension schemes responsibly but a few recent examples have raised some important questions.
'In the coming months we'll be publishing a Green Paper on pension funding and as part of this we'll be looking at powers of the Pensions Regulator.'