From education to enforcement – and expectations and flexibilities
The Pensions Regulator has made a number of statements recently that it is moving from education to enforcement in the context of scheme funding and corporate transactions. This is at least partly in response to some criticism of TPR in relation to the BHS Scheme, where it has been suggested that they were not active enough or involved early enough.
It remain to be seen how TPR will make this change in the context of the current powers that they have for financial support directions and contribution notices, or whether it is concluded that further powers may be needed. It was expected that the recent Government announcement on strengthening corporate governance requirements would include some measures designed to address this directly but there was no mention of it.
TPR has also suggested that more companies should make greater use of the flexibilities that already exist within legislation, and is interested in hearing any other ideas for "rescuing " defined benefit plans. The latest announcement on the BHS scheme may be the type of approach they are referring to with members offered the chance to agree to benefits that are higher than those provided via the
PPF but lower than their full BHS Scheme entitlement.
There is clearly more scope for changes to schemes and it can be expected that more employers will look to explore all of these options.