Monday, 11 February 2019 09:26

Rudd vows to jail bosses who endanger pensions

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Amber Rudd MP Amber Rudd MP

Work and Pensions Secretary Amber Rudd has won praise over plans to jail bosses who endanger company pensions.

The crackdown came in the wake of the collapse of BHS and the subsequent £571m pensions deficit.

Former BHS owner, tycoon Sir Philip Green, later agreed to pay £363m to end action against him by TPR.

Writing in the Sunday Telegraph Ms Rudd warned reckless employers: “We’re coming for you.”

 

She wrote: “To curb these freelancers playing fast and loose with your cash, I am going to make ‘wilful or reckless behaviour’ relating to a pension scheme a criminal offence, with jail terms of up to seven years for the worst offenders.

“We'll also give the courts powers to levy unlimited – yes unlimited – fines.

“So, if you run your company pension into the ground, saddling it with massive, unsustainable debts, we're coming for you.

“If you gamble your employees' futures on risky investments that put a pension scheme at risk, we're coming for you.

“And if you chronically mismanage a pension scheme and it goes under, we’re coming for you.”

The tough stance was backed by Frank Field MP, chair of the Parliamentary Work and Pensions Committee.

Mr Field said: “The Secretary of State deserves huge credit for stepping in to sort this so early in her tenure, where others have so long failed to act.

“But most people would be aghast to hear that this law doesn’t already exist.

“How could it ever have been legal for company bosses to recklessly or wilfully risk their workers’ pensions?

“Retrospection in the law is usually to be avoided, and for good reason.

“But the actions of greedy bosses like those at BHS and Carillion have torn apart thousands of people’s plans for the future.

“In such exceptional circumstances shouldn’t the long arm of the law be able to reach into the past, to gain justice for those who lost so much?”

Former Pensions Minister, Baroness Ros Altmann, said the Government was “right to be concerned as these liabilities have people's lives attached”.

She added: “Government and regulators must be vigilant to ensure employers cannot just ignore their pension liabilities.”

Hargreaves Lansdown’s head of policy, Tom McPhail, was broadly in favour of the plan.

He said: “In the majority of cases, the regulatory controls of pension scheme funding and the auditing of corporate financial management, do a good job at protecting workers and their pensions.

“However recent high-profile cases such as Carillion and BHS have shown this isn’t always enough.

“Bosses who are determined to put aside the interests of employees in the short-term pursuit of their own rewards or to prop up returns to shareholders, could now find themselves paying a very heavy price.

“Hopefully the threat of up to 7 years in prison or unlimited fines will be enough to make them think twice.”

But Mr McPhail did sound a note of caution.

He added: “There are potential knock-on consequences if this proposal is carried through.

“We may see greater pressure put on the dividends of companies with large pension deficits, which could in turn impact their share price.”

He said company directors “may ask themselves why they would want to live with this sword of Damocles hanging over them”.

 

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Last modified on Monday, 11 February 2019 09:47
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