'Speed up' pension rescue plans

Jessica TranterLast Update : Monday 9 May 2016 - 7:39 PM
'Speed up' pension rescue plans

Call for time limit on pension fund rescue plans

BHS storeImage copyright EPA

Rescue plans for troubled company pension schemes should have time limits, the head of the Pension Protection Fund (PPF) said.

Alan Rubenstein made the call while giving evidence to MPs about the collapse of BHS, whose pension fund had a £571m deficit.

He said that in 2012 BHS’s pension fund trustees had submitted a 23-year plan to return the fund to a surplus.

He said the average length of a recovery plan was nine years.

“We’ve learned that 23-year recovery plans are rather ambitious,” Mr Rubenstein told a joint hearing of the Work and Pensions and Business select committees.

The PPF wanted recovery periods to be “as short as possible”, but he acknowledged that the Pensions Regulator did not want to “push companies over the edge”.

Although the PPF now had to absorb the £571m deficit carried by the BHS pension scheme, it would not affect the fund’s finances.

The PPF, which protects pensioners in the event of a company failing with a pension fund that is in deficit, is funded by a levy imposed on all UK pension funds.

Mr Rubenstein said that the Pensions Regulator should have more power to intervene in takeovers when it was concerned about the financing of a company’s pension scheme.

He told MPs that a subsidiary of the Arcadia Group called Davenbush withdrew a guarantee for the BHS pension scheme in 2012. Arcadia is the retail empire controlled by Sir Philip Green, who sold BHS last year for £1.

Source: BBC Business

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2016-05-09 2016-05-09
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Jessica Tranter