The Pensions Regulator is seeking more power to stop another BHS-style pensions crisis
The Pensions Regulator (TPR) is seeking more powers to prevent another pensions crisis on the scale of BHS'.
In evidence given to the Work and Pensions select committee, TPR has called for a mandatory clearance process for some corporate transactions, such as a company being sold when its pension scheme is underfunded, as was the case with BHS.
Read more: Insolvency Service quizzed Chappell consultants over £1 BHS purchase
Sir Philip Green sold BHS to Dominic Chappell for £1 when the BHS pension scheme had a £571m deficit. The sale is now under investigation to find out if Green was dumping his pension obligations, but TPR wants the power to intervene before a company is sold.
Clearance would be especially important when a transaction "significantly weakens the scheme sponsor and the scheme is not sufficiently funded", TRP said in evidence to the select committee.
"TPR's anti-avoidance powers are designed to operate retrospectively to seek redress. While they act as a powerful deterrent, they cannot prevent avoidance activity on the part of employers prepared to take the risk," TPR said.
Read more: Pensions experts welcome Sir Philip Green's BHS top up
Pensions expert John Ralfe wrote in evidence to the committee:
BHS has reminded us that under the principle of limited liability companies are not automatically liable for deficits in a pension scheme sponsored by its subsidiary.
The law should be changed to require any company buying another company which has its own pension scheme, to guarantee the scheme.
This would encourage the parent to make sure it was properly funded.
TPR also wants to be able to fine employers who seek to avoid pensions obligations, and to demand more frequent valuations of pension schemes it is concerned about.
Frank Field MP, chair 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."