BHS Pension Scheme
27th June 2016
What has happened to BHS workers’ pensions? Workers need to know that their pensions have not disappeared. The Pension Protection Fund is there to ensure that most of their promised pension will be paid. This insurance is not funded by taxpayers, but by employers sponsoring all other Defined Benefit pension schemes, who pay a levy each year to contribute to this compensation. Many years ago, when an employer collapsed, workers could lose their entire pension, but those days are now gone.
What is the Pensions Regulator’s role? The Pensions Regulator must protect the PPF insurance arrangement from unfair claims and ensure that employers fund their schemes appropriately. It oversees Defined Benefit pension funds, to make sure trustees and employers are looking after members’ interests and working towards paying the promised pensions.
Why did the Regulator allow the company to be sold when it had such a large pension deficit? The Regulator does not have the power to prevent a sale, but it does have the power to force a seller to pay more money into the scheme after the sale, if the employer has not supported the scheme. Our pensions regulatory system is deliberately designed to allow companies to be sold, rather than standing in the way, since this can often be the best way to safeguard workers’ jobs and the long-term future of the business.