Company bosses who put the pension funds of their workers at risk will face fines or prosecution under new laws unveiled by the government.
The government is targeting reckless company bosses so that there’s some protection for pension pots for when companies go under. There will also be measures to target bosses who are guilty of mismanagement of pension funds.
BHS and Carillion
This comes after high profile examples such as retailer BHS and construction company Carillion.
It was recently revealed that the board at Carillion rejected a proposal that could have put £218 million into its pension scheme because they believed the company would recover. The pension pot is estimated to be at nearly £1 billion in deficit. This means that 28,000 members of Carillion’s pension schemes are now facing a cut to their retirement funds.
BHS’s pension scheme is believed to have a deficit of £571 million despite paying out heavily for dividends when Philip Green was in charge. Green has since agreed to give £363 million to prop up the pension scheme after selling it to Dominic Chappell for £1.
More power to intervene
Theresa May told the Observer earlier this year that she wanted to target company bosses who choose to “line their own pocket” at the expense of workers’ pension schemes.
Under new rules, it will be easier for the Pensions Regulator to intervene early when they see issues. There were strong demands for action from a parliamentary inquiry into the BHS case that wanted fines for companies who risked their pension funds.
Theresa May said that it was “absolutely vital that people who work hard and contribute to society throughout their career can have the confidence that their pension will pay out in retirement”.
“That’s why my government is making sure the Pensions Regulator has the powers it needs to crack down on the minority of businesses who shirk their responsibilities. The action we are taking will ensure that the majority of responsible employees, employers and pension schemes will no longer have to bail out the irresponsible few,” she said.
What do you think of the governments’ new plans for pension protections? Do you agree that more needs to be done to stop companies from risking pension funds? Let us know what you think.