The Pensions Regulator needs a “nuclear deterrent” to stop companies dodging their pension scheme responsibilities, according to a group of MPs.
Publishing its report into defined benefit pensions this morning, the work and pensions select committee says Govt should consult on giving TPR the power to triple the fines it can currently levy.
The MPs say that it is unlikely these punitive fines would actually be levied however as the threat would act as a deterrent to firms to stop failures in DB schemes like BHS’.
Under the new fines, BHS could have faced a charge of up to £1bn, compared to the £350m TPR has reportedly asked for to help fund the scheme’s deficit.
The committee also wants TPR to be made a “nimbler, more proactive regulator” that could intervene at an earlier stage in proceedings.
The committee says: “Regulatory intervention is often clunky and concentrated at stages when a scheme is in severe distress or has already collapsed.”
“TPR should never again, as it did in the case of BHS, take two years to intervene in a negotiation concluding with a 23 year deficit recovery plan.”
TPR should have to sign off on some major corporate transactions which could damage a pension scheme, the committee recommends, and most recovery plans should be no longer than 10 years long.
Meanwhile the committee is also proposing giving trustees greater powers to negotiate restructurings and introduce flexibility to indexation to improve DB schemes’ sustainability.