We are only a couple of weeks into the BHS saga, but already the story is starting to sound like the script of a pension disaster movie: tough business men in tough negotiations cutting hard deals, trustees fighting a corner, collapse, government intervention, Parliamentary inquiries, public spats between the parties. If it wasn’t for the loss of pension rights for the innocent members, a disinterested party might find this quite fun to watch.
The problem, I suspect, is that none of us will be “disinterested” for very long.
Back in the early 2000s there were a couple of very high profile business collapses, with the consequence, firstly, that workers lost accrued pension rights and, secondly, that a bunch of them turned up, naked, on Brighton beach in front of the hotel where the then Labour government was holding its party conference. See this BBC article from 2005.
The shock of seeing near-naked 60+ year-old retired steel workers contributed to the creation of the Pension Protection Fund (PPF) and its time-limited predecessor, the Financial Assistance Scheme.
The PPF is, of course, today an established component of the pension world (although now perhaps at risk because of the size of the BHS problem) and so we won’t get a PPF 2. But we may get other, perhaps “knee jerk”, legislation to reduce the risks of another BHS-type event. We will have to wait and see.
The government, however, isn’t the only one at the end of a pointed finger.
TPR has already appeared before the Parliamentary inquiry and has since submitted further written evidence. Rightly or wrongly, they are feeling the heat. The trustees of the BHS scheme, again rightly or wrongly, are also in the glare of a harsh light.
With the intensity of this scrutiny, it seems only logical that every party in the DB funding process will now become more conservative, more hard line, and their actions more aggressive, and so more back covering.
Philp Green famously drove a hard bargain. The collapse of BHS means that TPR, trustees and employers are in for a far tougher, far rougher round of funding negotiations over the next cycle.