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The Work and Pensions Committee – a group of 11 members of the UK’s lower house – published their recommendations in response to a government consultation on corporate governance standards.
The committee has separately been conducting an enquiry into the British Homes Stores (BHS) pension scheme, which is being assessed for entry into the Pension Protection Fund (PPF) following the sponsor’s bankruptcy last year. The scheme was significantly underfunded at its last valuation. The Pensions Regulator is attempting to secure contributions from Sir Philip Green, BHS’ former owner, who sold the business in 2015.
Frank Field, chair of the committee, said that BHS’ collapse and its pension problems were the result of “gross failures of corporate governance”.
In its response to the government corporate governance consultation, the committee called for pension scheme trustees to be subject to the Companies Act 2006, which currently only applies to company directors. It sets out directors’ duties and explains to whom they are responsible.
The committee stated: “[Pension scheme members’] income in retirement is reliant on the sustained success of the sponsoring company but former employees in particular are at particular risk of being neglected in corporate decision making. Our recommended measure may increase the chances both that directors would take into account the interests of pensioners in carrying out their duties and that those who have failed to do so will be held accountable in the courts.”
The MPs also want the UK’s existing corporate governance code for listed companies to be extended to “large private companies and those with over 5,000 defined benefit pension scheme members”.