The government has been urged to ensure The Pensions Regulator and the Financial Conduct Authority are “properly resourced” following the Work and Pension Committee’s report on the collapse of Carillion.
Liberal Democrat spokesperson for work and pensions, Stephen Lloyd, has warned the government that if The Pensions Regulator is not properly resourced, it may take its eye off the ball with auto-enrolment by being distracted with insolvent companies.
Lloyd highlighted that a key finding of the report was that although TPR has helped drive the implementation of auto-enrolment, it has found its resources and powers limited when dealing with an emergency situation such as Carillion.
“Auto enrolment is a genuine success of the Liberal Democrats in government, but a revolutionary policy like that requires a lot of work to be implemented and monitored properly. At the same time, The Pensions Regulator must deal with vital issues such as the treatment of pensioners in insolvent companies,” Lloyd said.
He has previously asked in parliament for the government to consider reviewing the place pension schemes have in the line of creditors.In light of the report on the collapse of Carillon, Lloyd is asking the Secretary of State for Work and Pensions to ensure that The Pensions Regulator and the FCA are “properly resourced, in terms of budget and of powers” to deal with the many challenges they face.
In its joint report with the Business, Energy and Indus trial Strategy Committee, the Work and Pensions Committee heavily criticised TPR. It said it is “far from convinced” that TPR’s current leadership can effect change, and that it was “deeply concerned” with evidence it received from the regulator.
Also commenting, Hymans Robertson partner Patrick Bloomfield said that following the publication of the report, the focus now must be on “making TPR’s existing powers easier for it to access, so they can be executed frequently and change company director behaviour towards pension schemes.
“The government also needs to reflect on TPR’s irreconcilable objectives to promote sustainable economic growth and protect pension schemes and the PPF. Carillion, BHS and Tata Steel have swung the legislative pendulum heavily towards protecting members. However, any sluggish economic performance in the future would swing this pendulum back to protecting business growth and tax revenues. Both the industry and regulators need consistency across economic cycles, especially when dealing with multi-decade pension issues.”
Furthermore, Old Mutual Wealth pensions expert Ian Browne said: “TPR has already begun asserting its authority to ensure that pension schemes remain a priority to all businesses, intervening in a number of merger and acquisitions such as the purchase of FirstGroup and Melrose’s takeover of GKN. It is crucial such a crackdown continues as the fate of thousands of people’s prosperity in retirement rests on such actions.
“Importantly this crackdown also needs to involve current DB schemes and continued scrutiny over directors’ decisions and actions. Pensions are deferred pay and it is crucial that directors view pension schemes as a priority when it comes to funding, not something that is second tier. The disaster created by Carillion’s collapse cannot be repeated.”