Ronald Reagan was president of the United States of America between 1981 and 1989. Before, during and after his presidency, Mr Reagan came in for some criticism from people who did not believe that he knew anything very much. More alert critics were able to point to the team of advisers and managers who worked behind the scenes for him and who knew how to handle him and more astute critics still pointed to this and to Mr Reagan’s ability to recall lines from films he had featured in and his ability to apply them to situations he found himself in in the 1980s. This ability helped make him popular and Mr Reagan understood that being popular would win him at least some of the votes which would keep him in power.
Amidst some of Mr Reagan’s instructions which were akin to telling some of his allies to stay behind and look after the girl whilst the rest of them formed a posse with him to head the bad guys off at the pass, Mr Reagan was consistent (or at least his advisers were) in telling one of his staunchest allies, Mrs Margaret Thatcher, that the country she represented was a more useful ally to the USA as an influential part of the European Union (EU). In this, Mr Obama was simply taking his cue from previous presidents of the USA when he made a similar point in April 2016.
You, the reader, will notice that today’s edition of Pensions News (PN) is coming to you after the referendum in which this country makes up its mind as to whether it wants to remain in the EU. This is partly because PN does not want anyone to suggest he is trying to influence other people and partly because today is Friday and PN invariably comes out on a Friday. In that, PN is simply taking his cue from previous editions.
Another reason that today’s piece is not about “that” story concerning the EU is that there have been two other stories, pension stories, which appear to have been running in parallel and which appear also to constitute a message from the pension sector that it can do things without deferring to the EU.
The two separate stories relate to (1) the pension scheme which belonged to the company formerly known as British Home Stores (BHS) and (2) the pension scheme which still is part of the group of companies which Indian-owned Tata is trying to sell. The first pension scheme is called the BHS Pension Scheme and the second isn’t; it is called the British Steel Pension Scheme (BSPS). Neither scheme involves employers outside the UK and inside the EU and both are in (financial) trouble.
The story around the BHS Pension Scheme is probably the easiest to understand since it has been portrayed in many sections of the media as if it were the sort of film that a young Mr Reagan would have starred in; a contest between the goodies and the baddies. The chief (almost comic book) baddy has been cast as Sir Phillip Green and the somewhat improbable good guys appear to be the Members of Parliament who are or who appear to be trying to get Sir Phillip to part with a couple of hundred million of our (still) British pounds so that the pension scheme, devoid of a sponsoring employer, can have them. Sir Phillip has told a lot of people that he will “sort out” the BHS Pension Scheme. This, the part just before the part where the hero whips the heavies in the last reel and gets the girl, is roughly where we are up to.
The story which surrounds the BSPS is (arguably - so PN is the one doing the arguing) of more interest to the pensions lawyer since it may precipitate a change in the law; a law which, in this case, has not been imposed on this country by the EU and which can be changed by Parliament of its own volition. The Government (this means the elected British Government as opposed to the elected European Parliament) has issued a consultation paper about what it feels could be done with or to the BSPS to save the steel industry that had supported it.
PN could spend a lot of time and space in going through the options set out in the consultation paper but it would take more time than PN has. In addition, going through the options would cause the reader to find something else to do and, worse still, PN could be accused of turning himself in to a technical update whereas the reader already knows that the point of these pieces is that they remind the reader that someone (nearly everyone) else does that sort of thing.
What PN can tell you, the reader, is that the option most favoured by the trustees of the BSPS appears to be the one that involves changing a section of the Pensions Act 1995. That section (section 67 if you really are interested in that sort of thing) exists to protect the accrued rights of members to benefits in a private (as opposed to public) sector pension scheme. Put in a way PN once used when he was a lot younger and trying to explain it to trainee solicitors, section 67 tells us that “those rights, the ones you have already, those rights are pretty much set in stone and cannot be taken away. That’s the law. Right?”. The option set out by the Government which appears most to appeal to the BSPS trustees is the option would involve a change in the law. The change would be to create an exception to section 67 for the BSPS meaning that changes could be made to the rules of the BSPS to erode or partially erode members’ accrued rights – thus making the pension scheme less badly funded (since funding those rights to benefits would be less expensive as a consequence). The proposal has met with some welcoming noises (these come mainly from the trustees), a reasonable amount of scepticism and some outright derision in other quarters (some of which PN has pointedly decided not to report). Nobody, to PN’s knowledge, has either criticised the proposal because of its pandering to the EU or has appealed to the EU’s institutions for help in eviscerating the proposal. No; the pensions sector seems to be telling the rest of the country that it is doing this one all by itself.
Perhaps the law will be changed to rescue, in a sort of a way, the BSPS. If successful, the change could mean that the beleaguered BSPS would be kept out of the potentially even more beleaguered Pension Protection Fund. If it goes through, the change in the law will be welcomed by some, derided by others and greeted in silence by most. The change (again, if it comes) will not, however, be criticised as a device thrust on this country by “the EU”. Perhaps that part alone is more interesting than the code which appears to have been spoken during what PN now thinks of as the BHS imbroglio. PN was curious about some of the statements which were made about this story and, at not inconsiderable expense (covered by himself in case PN’s employer’s accounts team happens to be reading) had one of said statements decoded by a great cryptographer of the age who was recommended to him by his uncle Mark. The statement, made by one of the chief good guys in the BHS imbroglio when speaking to fellow MPs reads as follows: "some of you stay here and look after the girl; the rest come with me. We’ll form a posse and head Sir Phillip off at the pass”. The late Mr Ronald Reagan would have been proud. Had he been around, he would have starred in Hollywood’s remake of “BHS Pension Scheme: the movie”.
Until next time…….