The Pensions Regulator should be given the power to veto takeovers that put too much strain on their pension schemes, according to the chair of the Institute of Directors.
In a paper, Barbara Judge set out ideas to avoid a repeat of the situation at retailer BHS which collapsed in April and sparked recriminations about its £571m pension deficit.
“The sad demise of BHS reflects well on nobody. The time has come to move on from the media firestorm, and to look at constructive and useful ways in which we can apply the lessons learned in the aftermath,” said Lady Judge, who used be chair of the Pension Protection Fund.
Companies involved in takeovers are able to approach the Pensions Regulator about their plans on a voluntary basis. Judge said that in future the regulator should investigate sales of companies with turnovers of at least £200m and where the pension fund covers more than 2,000 employees.
As MPs on the work and pensions committee prepare to hear evidence on the regulator’s powers, she said: “The business community has a responsibility to show that it cares about how companies treat their staff, and this has prompted me to make these proposals.
“Giving the regulator a veto over sales is a bold proposal, but I feel much more scrutiny is needed of large pension schemes at the point of purchase, if we are to avoid similar cases [such as BHS] happening again.”
Lesley Titcomb, chief executive of the Pensions Regulator, has previously written to Frank Field, the MP who chairs the work and pensions committee, acknowledging there is a case to examine its powers during takeovers.
