The behaviour and ethics of company directors moved centre-stage in the UK general election yesterday, when prime minister Theresa May announced plans to protect pensions from “irresponsible” bosses.
Directors found to have left a scheme under-funded could face fines or be struck off.
May said that in future, companies involved in a takeover or merger will have to tell the country’s pensions regulator, which will “apply certain conditions”.
A statement from the Conservative Party said the regulator could be given new powers to block takeovers if the companies involved fail to provide assurances for the future of pension schemes.
The Conservative Party said: “Under our plans, any company pursuing a merger or acquisition valued over a certain amount or with over a certain number of members in the pension scheme would have to notify the Pensions Regulator, who could then apply certain conditions.
“In cases where there is no credible plan in place and no willingness to ensure the solvency of the scheme, the Pensions Regulator could be given new powers to block a takeover. This would include the power to issue punitive fines for those found to have willfully [sic] left a scheme under-resourced.
“If fines proved insufficient, the company directors in question could be struck off for a period of time and a new offence could be introduced to make it a criminal act for a company board to intentionally or recklessly put at risk the ability of a pension scheme to meet its obligations.
“In short we will tighten the rules on pensions during takeovers, and increase punishments for those caught mismanaging schemes.”
The policy follows the collapse of high street retailer BHS, which went into administration in 2016, leaving pension liabilities of £571m.
Philip Green, the retail entrepreneur, sold BHS the previous year for £1 to new owner Dominic Chappell, owner of Retail Acquisitions. Green faced heavy criticism for the sale and management of BHS, and in February agreed to contribute £363m to the BHS pension scheme.