Pensions Regulator needs stronger powers to safeguard pensions



A poll out today by ICSA: The Governance Institute and recruitment specialist The Core Partnership finds that almost two thirds of company secretaries surveyed feel that The Pensions Regulator (TPR) should be given stronger powers to block takeovers in order to safeguard pensions. A majority of 64% are in favour of this, with only 15% opposed and 21% undecided.


“With FTSE 100 pension deficits soaring in the last year and the BHS pension debacle still fresh in people’s minds, it is little wonder that we are seeing calls for more powers to be handed to The Pensions Regulator,” says Simon Osborne, chief executive of ICSA: The Governance Institute. “We would advise some caution, however, as it would stifle corporate transactions if pension members had the ability to block all deals and this would drive investment out of the UK at a time when investment is much needed.


“It might be more sensible to ensure that there are robust safeguarding provisions in place in any takeover agreement so that the TPR can ensure that pensions’ interests are adequately protected. If a company with a large pension fund is being acquired, there should be a referral to the regulator to make sure the members of the scheme have been adequately considered. If problems with the fund’s sustainability come to light, the regulator should be able to stipulate remedies.”


The poll also puts more onus on directors to look after a company’s pension fund. Some 55% of those surveyed feel that directors’ duties should be expanded to include a specific duty of care for a company’s pension fund, with an additional 14% uncertain and just under a third (31%) against this suggestion.


Other opinions expressed in the poll include:


  • Directors already have a fiduciary responsibility for the effective running of the company which means that they should be considering current employers and pensioners even now
  • No director of a company should be a trustee of the sponsored scheme as the risk of potential conflicts of interest is too high
  • A significant portion of the issues a number of pension funds are facing are a direct result of Government policy therefore it does not seem appropriate to impose a duty on directors for issues not of their making
  • Bolstering the independence of a pension fund from the corporate would be a good way of bringing the management issue into the spotlight
  • The covenant review should form part of the company’s annual audit and additional disclosure in the accounts about convent strength should be encouraged. Furthermore, the TPR should be able to unwind transactions that weaken the covenant.

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28 September 2016



written by Jon Moores
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