THE pensions regulator should be given new powers to block “unscrupulous” deals, or be bolstered by the creation of a separate agency, in order to avoid a repeat of the BHS pensions debacle according to the former chair of the Pension Protection Fund, Lady Barbara Judge.
She believes a new entity along the lines of the competition and markets authority could scrutinise proposed deals over a certain size, for example when a company being acquired has turnover of more than £70m. It would make sure the transaction does not disadvantage pensioners of the firm that is being bought.
Judge said: “We need to make sure members of funds are protected by pre-transaction clearance. I believe that a plan of the transaction needs to be filed with a new regulator, even if the fund appears to be in good shape. The acquirer and acquiree must make provision to top up the fund so they can put money in if necessary.
“The idea is not to block deals per se but to make provision to protect pensioners against any unscrupulous parties. People pay in a great deal of money and have expectations of their retirement. Society has a responsibility to look after them.”
Legislation would be required to bring about any new regulation.
Judge believes business will back her proposal and she intends to take the plan to the Department for Work and Pensions and the Department for Business, Energy and Industrial Strategy. Judge added: “The moment to do it is now.”
However, Mark Littlewood, director general at the Institute of Economic Affairs, said: "We don't need a regulator with more teeth, simply more clarity in the law of contract. Rather than knee-jerk regulation, policymakers should focus on ensuring the right legal frameworks are in place.”
The pensions regulator is looking at whether it can demand Sir Philip Green foot the bill for at least some of the £571m blackhole in the BHS pension scheme. The scheme's deficit widened dramatically after BHS was sold on by him to Retail Acquisitions.
Yesterday it emerged that the pensions watchdog has launched a probe into Green's Arcadia Group which includes Topshop.