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‘Nuclear deterrent’ against DB failure needed, MPs say

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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.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. £1 billion pound fine do they mean £1000 Million in English.

  2. THis certainly will be the perfect deterrent. All FDs who are on the ball and view the future health of their firms, will be doing their utmost to stop all DB schemes. AE will be a good alternative and save them fortunes.

    The Government will then have achived another victory in the decimation of pensions. Great policy.

  3. While company heads can limit liability to the company and not take personally liability or accountability for their successes or failures then it this is all just polishing a turd. As such cultures and ideologies within corporates will not change…as to Government….consult away; force the general public to commit to pensions they have no faith in. This is to preserve the greed and ego of such politicians, regulators and other elites who have enjoyed this merry go round since inception – this approach is far too weak and is not about bringing change but rather keeping the satus quo. A society can’t educate the masses and treat them like morons at the same time; the masses know this game is up and so do most MP’s.

  4. I suspect that even the consultation will lead many to conclude that the pension scheme is threat to the future viability of the sponsoring employer.

    Presumably the fine would result in the employer being bankrupted.

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