BUSINESSMEN like Sir Philip Green should face “nuclear deterrent” punitive fines for avoiding pension responsibilities to avoid a BHS-style “disaster” happening again, an influential group of MPs has said.
The Commons Work and Pensions Committee said stronger regulatory powers would give Sir Philip a far stronger incentive to make good on his promise to “sort” the £571 million BHS pension fund black hole.
The controversial tycoon is thought to have offered £250m to help plug the deficit, £100m less than the Pensions Regulator demanded.
But the MPs said the regulator should have the power to threaten Sir Philip with a fine of up to £1bn unless he paid his contribution.
The power would act as such a strong deterrent to avoiding responsibilities that it would never have to be used in practice, the committee’s report on defined benefit pension schemes said.
Labour MP and committee chair Frank Field said: “It is difficult to imagine the Pensions Regulator would still be having to negotiate with Sir Philip Green if he had been facing a bill of £1bn, rather than £350m. He would have sorted the pension scheme long ago.”
Mr Field added: “To prevent another BHS we need to have the means to nip inevitable disasters like this one in the bud.
“It will sadly be of no comfort to the 20,000 BHS pensioners facing cuts to their promised pensions, but had just some of these measures been in place they might never have ended up in that situation.”
The cross-party committee made a number of other recommendations for the regulation of pension schemes, insisting responsible employers had “nothing to fear” from the proposals.
The MPs said regulatory intervention was often “clunky” and concentrated on stages when a company pension scheme had already collapsed.
The Institute of Directors backed the report and said what happened to BHS pensioners was an “outrage”.
Its director general Simon Walker said: “This timely report proposes a number of measures which must be closely considered in light of the flaws in the system exposed by the collapse of BHS.
“The committee is right to say that responsible businesses - which is to say, the vast majority - have nothing to fear from potential changes that will only increase the quality of governance in some of our best-known firms.
“Ensuring that the regulator is a more active player in the period before schemes collapse, rather than offering post-mortem analysis, must be a priority.”
Lady Barbara Judge, chairman of the Institute of Directors and former chairman of the Pension Protection Fund, added: “What happened to the BHS pensioners was an outrage and the committee is right to look at significant changes to the regulatory landscape.
“The Pensions Regulator needs more power to protect pensioners during the early stages of takeovers in order to avoid similar cases to BHS being repeated.”
The Department for Work and Pensions said most employers were managing their pension schemes responsibly, but added that “a few recent examples” had “raised some important questions”.
Lesley Titcomb, chief executive of the Pensions Regulator, welcomed the report, which, she said, recognised the importance of “robust and proportionate regulation” for workplace pension schemes.