Better protections for UK pension scheme members whose companies are taken over — a response to the scandal at BHS — are not likely to arrive before 2020, a senior official has said.
Ahead of the general election in June, Theresa May, the prime minister, promised to introduce new measures to protect pensions from “irresponsible behaviour” by executives.
Her party’s manifesto said the Pension Regulator would be given powers to “scrutinise, clear with conditions or in extreme cases stop mergers, takeovers or large financial commitments that threaten the solvency of the scheme”.
There is currently no requirement for companies to seek clearance from the Pensions Regulator before carrying out a deal.
On Thursday, a senior official with the Department for Work and Pensions said any proposals to strengthen the power of the regulator are not likely to come before 2020.
“The chances of a pensions bill before 2020 look very slim,” said Charlotte Clark, director, private pensions and stewardship with the DWP, to an industry conference in Manchester.
Ms Clark said a forthcoming white paper on options for the UK’s defined benefit pension sector, which serves about 11m members, would contain proposals for strengthening the regulator’s powers.
However, any new rule for companies to seek clearance from the regulator is only expected to apply in certain circumstances, such as if a pension scheme involved is of a certain size.
Mrs May’s pledge followed the high profile collapse of BHS in 2016 which resulted in the Pensions Regulator securing a £363m payment from Philip Green, the billionaire former owner of the high street retail chain, for the company’s underfunded retirement plan.
Ms Clark said the white paper, expected at the end of February, would not immediately “lead to legislation, but to another stage”.
The white paper is also likely to contain proposals to give employers more flexibility to switch to less generous annual increases for pensioners.
Ms Clark said proposals to consolidate the UK’s 6,000 private sector defined benefit schemes “would feature quite strongly” in the white paper, though she said it was “unlikely” the government would force schemes to pool, which some sectors of the industry had requested.
Speaking at the same conference, The Pensions Regulator said it was exercising its powers to force an employer to fund their pension scheme, and had other similar cases “in the pipeline”.
The regulator rarely discloses when it uses its funding powers against companies that are not treating pension scheme members fairly.
“We are becoming tougher and faster,” said Lesley Titcomb, its chief executive. “We have heard the messages from the community we regulate and they need us to be clearer and they expect us to take action.”
The development comes a year after the regulator faced criticism from MPs about its oversight of the BHS pension scheme, which had a £571m funding hole when the business collapsed in 2016, a year after Sir Philip sold the retail chain for a £1.
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