Increase fines to prevent another BHS-style pension scandal, MPs say

The Work and Pensions Committee has called for reforms of The Pensions Regulator

The department store’s collapse in April has affected 11,000 jobs and 22,000 pensions (Reuters)

The Government should dramatically increase fines for companies that shirk their pension fund responsibilities in order to see off another future BHS-style scandal, MPs have recommended.

The House of Commons Work and Pensions Committee said giving The Pensions Regulator (TPR) increased powers would act as a “nuclear deterrent” to unscrupulous employers and prevent employees getting short-changed.

Some 20,000 BHS pensioners are facing cuts to their promised pensions after former owner Sir Philip Green saw the firm’s fund go from a £43m surplus in 2000 to a £345m deficit by 2015.

The new report also calls for new powers for the regulator, including the ability to consolidate smaller schemes into a statutory fund and to otherwise renegotiate restructurings for schemes to stop them collapsing.

The MPs recommended that TPR should be reformed into a “nimbler, more proactive” regulator that would be expected to intervene sooner when company pension schemes appeared to be in difficulty and before problems mount up.

Frank Field, the Labour MP who chairs the committee, said he hoped that “never again” would problems such as those seen at BHS again emerge.

“It is difficult to imagine the Pensions Regulator would still be having to negotiate with Sir Philip Green if he had been facing a bill of £1bn, rather than £350m. He would have sorted the pension scheme long ago,” he said.

“The measures we set out in this report are intended to reduce the chance of another scheme going down the BHS route.

“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.”

A spokesperson for the Department for Work and Pensions said it would soon be publishing a review of pensions rules.

“The majority of employers are managing their pension schemes responsibly but a few recent examples have raised some important questions,” he said.

“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.”