Company bosses who endanger their staff company pensions will face fines or prosecution, as this will become a criminal offence under new measures to be announced by the government.
According to reports over the weekend, the Department for Work and Pensions (DWP) will this week publish its defined benefit (DB) white paper, which will also make easier for The Pensions Regulator (TPR) to intervene early when it detects issues.
This move follows the high-profile cases of BHS and Carillion, in which their pension funds were left struggling with high deficits after the companies collapsed.
BHS went into administration in April 2016, putting workers' retirement nest eggs at risk and The Pensions Regulator has been investigating the case since.
In the end, a £363m settlement with Sir Philip was reached to fund a new independent pension scheme for 19,000 former BHS workers.
At the time, the Work and Pensions committee suggested new powers for TPR, as these would provide what it described as a "nuclear deterrent" against another BHS-style scandal.
Meanwhile, the committee is now investigating Carillion, which has 13 final salary schemes in the UK with more than 28,500 members, and a deficit of £587m at the end of July.
The contractor’s DB pension schemes are all either in the retirement fund of last resort, the Pension Protection Fund (PPF), or will soon enter it, meaning many members face a cut to their pension provision.
Carillion, which employs about 43,000 people, had been struggling for several months, issuing a profit warning last year that sank its share price – which has fallen from more than £2 a year ago to about 14.2p just before it went into administration.
Prime minister Theresa May said in January that she would stop company bosses from profiting while putting their workers’ pensions at risk.
The paper, expected this week, which follows a consultation launched in February into what needed to be done to ensure confidence and secure the future of these schemes, will consider the need to adapt the regulatory regime.
Industry body Pensions and Lifetime Savings Association (PLSA) has welcomed the government’s proposals “to crack down on reckless behaviour which puts DB pensions at risk”, said Graham Vidler, director of external affairs.
He said: “11 million people depend on DB for their future income and a focus on protecting the security of those pensions is essential.
“As well as introducing criminal sanctions we'll be looking to the forthcoming white paper to strengthen and clarify The Pensions Regulator's powers and to help more schemes take advantage of the opportunities of consolidation."