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Pensions Protection Fund urges fines for firms trying to drop scheme obligations

Published 11/10/2016

Frank Field, chairman of the Work and Pensions Committee, says the body received important evidence from the PPF
Frank Field, chairman of the Work and Pensions Committee, says the body received important evidence from the PPF

Companies should be fined for trying to ditch their pension scheme responsibilities under more "interventionist" regulation, according to the pensions lifeboat.

The Pension Protection Fund (PPF), which steps in to protect employees with so-called defined benefit schemes when firms go bust, and The Pensions Regulator are both calling for greater powers to prevent pension funds being dumped when firms are sold.

In evidence published by the Work and Pensions Select Committee, t he PPF s aid it wants the regulator to be able to wind up pension schemes and have punitive powers to slap employers with penalties for seeking to avoid their pension obligations.

The Pensions Regulator itself has said it wants firms with large pension deficits to be required to inform it if a sale of the company is imminent and powers to intervene if necessary.

It is asking for a mandatory clearance process for certain corporate transactions and the power to demand more regular scheme valuations where it has concerns.

The risk to company pension schemes when a company is sold has been thrust into the spotlight after the collapse of retail chain BHS.

It went into administration shortly after being sold for £1 by former owner Sir Philip Green, with a reported £600 million pension scheme deficit.

The BHS pension scheme is now likely to be left to the PPF.

The recent sale of troubled turkey firm Bernard Matthews to food tycoon Ranjit Boparan also left its near £20 million pension scheme deficit to be shouldered by the PPF.

The Pensions Regulator has come under heavy fire for its failure to step in when BHS was being sold.

The PPF said it wants the regulator to have new powers and has made a plea for a "more interventionist" approach to the regulation of scheme funding.

Frank Field, MP and chairman of the Work and Pensions Committee, said: "The committee has received very important evidence from the Pension Protection Fund on lines we might take in strengthening the proactive powers and abilities of the regulatory machinery.

"While the committee will be considering these proposals in detail, the Pension Protection Fund gives us a very useful steer on reforms we may wish to propose to the Pensions Regulator and we will have a chance to put these ideas, amongst many others, to the Regulator when they come before the committee."

A spokesman for The Pensions Regulator said: "Our submission to the Work and Pensions Select Committee sets out a number of ways where we feel the regulatory framework could be strengthened in areas such as clearance on corporate actions and information gathering.

"We look forward to giving evidence to the inquiry to elaborate on these proposals in more detail in the coming weeks."

Press Association

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