Following the collapse of British Home Stores (BHS), the government has proposed that The Pensions Regulator be given new powers to scrutinise corporate deals that could threaten the solvency of a company's pension scheme.
In their general election manifesto, the Conservatives said that companies pursuing large mergers or acquisitions would have to notify The Pensions Regulator who could then apply particular conditions depending on the company's pension scheme. In extreme cases where there was no credible plan or willingness to ensure the solvency of the pension scheme, The Pensions Regulator would have the power to completely block a takeover or acquisition.
However, the proposals have come in for criticism by Alan Rubenstein who until recently was the chief executive of the Pension Protection Fund (PPF), the lifeboat fund for private sector defined benefit schemes. Speaking in a recent interview, he said that such proposals were "unworkable".
"What I don't think you want to do, and I don't think you can do, is introduce something that effectively interferes with the sensible running of a business," he said. "I think that would be a real mistake and a real shame."
Mr Rubenstein goes on to say that there are other ways to protect pension schemes, such as bringing in tougher rules to deter company bosses from being irresponsible with their company's pension schemes.
"This is a personal opinion, not a PPF opinion, but what you could have is that the regulator could effectively proactively call in schemes when they hear about transactions. That doesn't avoid the problem of people saying 'the first I knew about this [company collapse] was when I read it in the papers,'" he said.
"But if you have a tougher regime standing behind that, that says if you've acted to the detriment of the pension scheme, then not only are you exposed to a contribution notice, but also to a penalty on top of that, then I think that would have a really positive effect."
The issue is of particular relevance at this time as MP's are currently scrutinising The Pensions Regulator over its supervision of Carillion's retirement funds, the black hole in the construction group's 13 pension funds now totalling £900 million.