UK pensions watchdog may hit companies with 'nuclear deterrent' powers
The Work and Pensions Committee has called for radical reform of corporate pension schemes regulation to avoid future failures, with increased powers given to the Pensions Regulator including "nuclear deterrent" fines to force employers to deal with their pension shortfalls.
Committee chairman Frank Field also criticised the watchdog over the "reactive and slow-moving" way in which it has tried to tackle the problems at BHS, including the decision to allow a 23-year deficit recovery plan for the failed retailer.
Field said many of the proposals would have prevented the scheme from developing a large deficit and facing being absorbed into the Pension Protection Fund.
The committee's 84-page report also recommended takeovers of companies with substantial pension deficits should be forced to apply for clearance from the pensions regulator.
While filing for approval from the regulator is currently voluntary, the number of companies applying has plunged from 263 a decade ago to just nine last year, which the report suggested was an indication that "some unscrupulous sponsors may well be calculating that they are better off risking a protracted anti-avoidance battle than coming to an immediate pension settlement" ■