The British Chambers of Commerce has come out strongly on the issue of BHS’s collapse, arguing that smaller businesses should not be forced to pick up the tab for high profile corporate failures.
“When big companies go bust, it doesn’t seem fair to make small- and medium-sized firms and taxpayers cover the pension deficits that are left behind,” said Dr Adam Marshall, acting director general of the British Chambers of Commerce. “This is particularly true when there are legitimate questions about corporate decision-making and payouts to shareholders.
“Small- and medium-sized firms make a substantial contribution to the Pensions Protection Fund through an annual levy. It would be unfair for their payments to have to rise to cover the deficits in gigantic schemes like that of BHS, and would be a potential brake on those levy payers’ future investment and growth.
“Levy-paying firms of all sizes would be incensed if they find that they have to carry the can for huge corporate pensions deficits, just months or years after corporate shareholders received huge financial windfalls.”
‘Reform of pensions system needed’
Frank Field, Labour MP and chair of the Work and Pensions Committee, has said that the current regime governing oversight and regulation of corporate pensions schemes needed serious reform in the wake of the BHS collapse. He said: “The select committees’ in-depth case study on BHS is illustrating how such schemes are already creaking from rising life expectancy and record low returns on capital.
“Pension law and regulation must urgently adapt to the issues of the future, rather than the problems of the past. The whole savings edifice is in danger.”
Field says: “This will be a major inquiry considering radical solutions to one of the great problems of this age. The inquiry will consider, amongst other things, radical solutions that could be more easily implemented if real returns on capital rise again.”