The takover makeover
It is fair to say that the reputation of business has been dragged through the mud, often unfairly, in recent years. Sometimes though, the bad headlines are deserved; the scandal at BHS has done the world of enterprise no favours at all. Sad as the demise of the retailer was for the High Street, of course it is most distressing for those employees – past and present – whose pensions are now in jeopardy as a result of years of mismanagement. To ensure that something of this scale never happens again, I believe that it’s time the Pensions Regulator was given more powers to step in when a company’s ownership is changing in such a way that an existing pension scheme might be imperilled.
As a former chair of the Pensions Protection Fund, as well as having overseen several M&A transactions myself, I do not make this recommendation lightly. I believe however, that the business community must open itself up to more scrutiny if our employees and the public at large is to trust us once again.
The IoD proposes that the Pensions Regulator should focus on takeover deals which have a turnover of £200 million or in organisations where there are over 2,000 employees who are a part of the pension fund. By focusing upon deals of this size rather than all takeovers, merger and acquisition activity can continue to thrive.
Pension fund trustees themselves should also be better prepared. I strongly believe that every trustee should have the financial acumen and experience, or undertake the necessary training for this role. This emphasis upon the education of trustees would enable them to meet their fiduciary obligations and thus better protect pension schemes. Indeed, more financial training and education should not simply be confined to trustees - the younger generation would also greatly benefit, too.
Needless to say, we at the IoD stand ready to assist the Government as much as possible. We all have a stake in the public’s confidence in business.