MP's Urge Better Workplace Pension Protection

Stronger rules to protect workplace pension holders may be needed in light of BHS's failure, MPs have said.

MPs said it was "imperative" that regulations did not enable firms to evade their pension responsibilities.

BHS's pension scheme had a £571m hole when it collapsed, far higher than the retailer's market value.

"There may be a case for stronger and more proactive regulation," said the Work and Pensions, and Business, Innovations and Skills committees.

However, the committees' report on BHS added that it was important "a balance" was found to enable otherwise viable companies to continue operating.

When BHS fell into administration, its pension scheme automatically fell under the auspices of the Pension Protection Fund (PPF) - the lifeboat for pension schemes.

The PPF ensures people are paid their pension even when a company goes bust.

To pay for this, compulsory annual levies are charged on all schemes that would be eligible to enter the PPF if needed.

The risk of taking on the pensions burden is thought to be one of the reasons that BHS failed to find backers or buyers for the business as a whole.

MPs said occupational pension schemes were "perhaps the greatest challenge facing longstanding British businesses".

A combination of people living longer, low interest rates and global competition had made it harder for firms to afford their pension liabilities, they said.

Investment firm Hargreaves Lansdown's head of retirement policy, Tom McPhail, said the MPs' report into BHS's collapse had exposed the tensions between shareholder and pension scheme member interests.

"The possibility of an economic slowdown and increasing inflation could exacerbate an already unsustainable mismatch between the promises made to some scheme members and the ability of sponsoring employers ever to pay for those promises," he said.

Mr McPhail said how best to meet the demands of both sides should be "an urgent priority" for new Pensions Minister Damian Green.

http://www.bbc.co.uk/news/business-36880230

25th

July 2016


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