What happens next with British Home Stores (BHS) will judge whether pensions regulation is strong enough to safeguard members says Ros Altmann.
Speaking to PP, the former pensions minister said finding the right path between employers and schemes is a delicate balancing act.
It comes as a report from MPs makes clear Sir Philip Green did not co-operate enough with the Pensions Regulator (TPR) before the sale of BHS in March 2015 and also could have done more to support its schemes.
The watchdog is investigating whether Green should be on the hook to pay up the £571m funding deficit.
The outcome could have implications for regulations as they stand. "Our system is flexible so it can accommodate different corporate needs but it also does need teeth," added Altmann (pictured above).
"If a sponsor does not support their pension fund properly then there are consequences and that is what we will see with BHS.
"It is a good test case to see what the regulator can do afterwards [to make a sponsor pay money]. I hope the employer will do something anyway."
Under current rules, the onus is on an employer to give the regulator information about the pension scheme it is responsible for before a sale.
If things go wrong afterwards, TPR has the power to come and demand money from the former sponsor if they find members have been short-changed.
Altmann said: "Normally an employer will get clearance, the advisers and trustees will tell them [the sponsor] they need clearance from the regulator."
However Altmann warns "it is a delicate balancing act" as giving TPR the power to stop corporate deals could make schemes go bust and they would end in the Pension Protection Fund anyway.
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