UK prime minister Theresa May has promised a crackdown on executives who rake in huge bonuses at the expense of their employees’ pensions.
Writing in The Observer newspaper in the wake of the fall of construction giant Carillion, May said: “In the spring, we will set out new tough new rules for executives who try to line their own pockets by putting their workers’ pensions at risk—an unacceptable abuse that we will end.”
She also pledged that by this time next year, all listed companies will have to reveal the pay ratio between bosses and workers. “Companies will also have to explain how they take into account their employees’ interests at board level, giving unscrupulous employers nowhere to hide.”
Businesses, she said, will also have to show that they have taken into account the long-term consequences of their decisions. “Too often, we’ve seen top executives reaping big bonuses for recklessly putting short-term profit ahead of long-term success. Our best businesses know that is not a responsible way to run a company and those who do so will be forced to explain themselves.”
However, former pensions minister, Baroness Ros Altmann—who served as minister of state for pensions under David Cameron and Theresa May—warns that although the Pension Protection Fund (PPF) can cope with Carillion’s demise, and the firm’s pensioners will see much of their pension replaced by the PPF, things could look bleaker for pensioners in a hard-Brexit scenario.
“The PPF has budgeted for some big schemes to fail and can manage the onboarding of all Carillion’s pension schemes. More worrying, however, would be if some of Britain’s largest manufacturing firms face failure as a result of a hard Brexit, which could undermine our automobile or chemical sectors in which defined benefit schemes have been prevalent.”
Altmann continued: “If too many of those businesses suffer as a result of leaving the Single Market and Customs Union then the PPF could face difficulties that might even result in reduced benefits for workers covered by the insurance it provides.”
“I hope the Carillion situation will be a wake-up call for the government to take seriously the threats and risks of leaving the EU without securing the integrated supply chains and regulatory standards alignment that our large industrial companies depend on.”