The Work and Pensions Committee set out plans for an on-going inquiry into the role of the Pensions Regulator (TPR) and its regulation of defined benefit pensions in its joint parliamentary report on the collapse of BHS.
The report highlighted the risks involved with defined benefit pensions adding that there could be a case for stronger and more proactive regulation in order to prevent sponsor companies from evading pension responsibilities, therefore passing the burden onto other schemes that pay the Pension Protection Fund levy.
Frank Field, chair of the committee, said, “The lessons of BHS must be learnt. This may mean strengthening the powers and resolve of the Pensions Regulator to act early, quickly and firmly with those who seek to avoid their pension responsibilities.”
As part of its inquiry, the select committee has invited written evidence on defined benefit pensions regulation by TPR.
MPs will investigate the adequacy of defined benefit pension scheme regulation and the application of TPR’s regulatory powers, specifically in relation to the pension schemes of complex and multinational companies including BHS.
The inquiry will look at the level and prioritisation of resources by TPR.
The committee wants to find out whether a greater emphasis on supervision and more pro-active regulation would be appropriate and whether specific additional measures for private companies or companies with complex and multinational group structures are required.
It will also examine the pre-clearance system, including whether it is adequate for particular transactions including the disposal of companies with defined benefit schemes.
MPs will look at the powers relating to scheme recovery plans and the impact of TPR’s regulatory approach on commercial decision-making and the operation of employers.
The committee has also invited evidence on the Pension Protection Fund, which could be responsible for bailing out the BHS employees if Sir Philip Green fails to sort the retailer’s pension deficit.
The committee will examine the sustainability of the PPF and the fairness of the PPF levy system and its impact on businesses and scheme members.
Evidence addressing the role and powers of pension scheme trustees as well as the relationships between TPR, PPF, trustees and sponsoring employees is also welcome.
Field added that a balance must be found so that “businesses that are run reputably and responsibly are not put under undue restriction.”
“Ultimately, defined benefit schemes must be placed on a sustainable footing,” he said.
The committee is therefore seeking evidence and recommendations on the balance between meeting pension obligations and ensuring the ongoing viability of sponsoring employers, including TPR’s objective to “minimize any adverse impact on the sustainable growth of an employer”; whether the current framework is generating inter-generationally fair outcomes; and whether the current wider environment, including historically low interest rates, warrants an exceptional approach.
Those wishing to provide evidence or recommendations to aid the committee’s inquiry have until 23 September to do so.
Responding to the joint parliamentary report into BHS, Lesley Titcomb, chief executive of TPR, said, “TPR is determined to achieve the best possible outcome for members of the BHS pension scheme and PPF levy payers.
“Our anti-avoidance investigation continues and we expect to have made significant progress by the end of this year.
“Discussions are ongoing with various parties and our focus remains on the members of the BHS pension scheme.”
Titcomb added, “We will reflect on the findings of this report and will engage fully with the next phase of the Work and Pensions Committee’s enquiries into defined benefit pensions. We have already written to the committee setting out our preliminary views on which aspects of the regulatory framework could be improved and we look forward to providing further input later this year.”