THE Government’s pensions regime is not fit for purpose because it fails to protect British workers from unethical bosses and predatory foreign firms, according to a Yorkshire MP.
Dan Jarvis, the Labour MP for Barnsley Central, has written to Richard Harrington, the new Pensions Minister, calling on the Government to implement reforms to ensure workers’ pensions are protected
Mr Jarvis is also demanding that the Pensions Regulator has enough resources to do its job properly. Mr Jarvis was a leading figure in a five year campaign to save the pensions of 500 former workers at Carrington Wire, a business based in Elland, West Yorkshire. Last year, Mr Jarvis was “bitterly disappointed” by the announcement that the Carrington Wire workers’ defined benefit pension scheme would be forced to enter a protection fund.
In his letter to Mr Harrington, Mr Jarvis said he had raised concerns about the Government’s pensions protection policy on numerous occasions. Mr Jarvis expresses concern at the number of people facing serious hardship as a result of companies becoming insolvent with large deficits in their pension funds.
He continued: “In particular, I raised with the then Pensions Minister the case of Carrington Wire. This issue is now again at the forefront of debate following the collapse of BHS..It is clear that current Government policy relating to pension protection is not fit for purpose. As it stands, we have a system where workers, virtually all of whom will bear no responsibility for the insolvency of a company, are left facing serious hardship by the collapse of the company they work for, in the event that a large pension deficit has been accumulated.”
In many cases, the collapse of the business and pension fund deficit is due to poor or unethical management, Mr Jarvis said.
He added: “There is also a particular vulnerability in relation to foreign companies acting in a predatory way. In these cases, it is grossly unfair that ordinary working people should see their pensions cut while those responsible for the problem bear little responsibility.”
Mr Jarvis is calling on the new minister to review pension protection provision.
Mr Jarvis added: “Any review should also look at what reforms could be undertaken to ensure workers are guaranteed full protection of their pensions and whether the Pensions Regulator has adequate resource to do their job.”
A Department for Work and Pensions spokesman said: “The Pensions Regulator has a range of robust measures to protect both pension scheme members and the Pension Protection Fund, including strong anti-avoidance powers.”
The spokesman highlighted recent successful uses of the regulator’s anti-avoidance powers. The regulator secured an estimated £184m in the Lehman Brothers case and an £8.5m settlement with two Russian companies following an investigation into the Carrington Wire defined benefit pension scheme.
The spokesman said that, in the case of BHS, the regulator had launched an anti-avoidance investigation “and the right approach must be to let the regulator’s investigations run their course”.
“Meanwhile the regulator has said that it will consider any credible and reasonable proposals that are put to it by Sir Philip Green (the former boss of BHS) or his advisers.”