Pensions regulator wants worker protection powers

Lesley Titcomb is requesting new powers to stop final-salary pension schemes being dumped when companies are sold.

Currently, companies do not have to inform the regulator before a sale, but the regulator would like firms with large pension deficits to be required to inform her if a sale is imminent and powers to intervene if necessary.

The recent collapse of BHS, which entered administration when former owner Sir Philip Green sold the company for £1, has highlighted the problems of final-salary or defined-benefit schemes when a company is sold.

The regulator was criticised by the Work and Pensions select committee for failing to show urgency in dealing with the emerging crisis at BHS, despite not having powers to intervene in a sale.

The regulator can only take action once a deal has gone ahead, using her anti-avoidance powers to claim compensation if she thinks the purpose of the sale was to dump or reduce the pension liability.

Talking to the BBC, Titcomb said: “We may need new powers in certain situations. For example, where a company is being sold and the scheme is significantly underfunded, then it may be appropriate for the regulator to be told in advance about the transaction, and it may be appropriate for us to have the power to intervene in some way, which we don't have at the moment.

"There's no requirement to tell us. There's no requirement to come to us for clearance and we have no power to intervene if people do. The vast majority of employers comply with the law and do the right thing. What we want to tackle is the particular limited set of circumstances where, for example, a sale can go ahead without us being aware of it."

Frank Field, chair of the Work and Pensions select committee, is currently holding an inquiry into whether the regulator has adequate powers and the future of company pension schemes, but has admitted that ‘the way it [the regulator] behaves, its operation at speed and its attitude and culture has to change’.