BHS received a lot of bad publicity. Pensioners vote at a higher rate than younger people. And pensioners vote Conservative at a higher rate than younger people. So I wasn’t surprised to see more detail about pensions in the Conservative Party’s Manifesto than in those of the other parties.

Some of the proposals were expected. Those around regulation on corporate transactions are more surprising, and represent a significant change from the Department for Work and Pensions’ February Green Paper.

Corporate Transactions

The opening paragraph in the Manifesto sets the scene for the new powers:

Business owners who abuse pension funds and put them at risk, sometimes for their own lavish enrichment, are entirely in the wrong

The Manifesto promises:

  • Mandatory notification to the Pensions Regulator of “mergers, takeovers or large financial commitments that threaten the solvency of the scheme“;
  • New powers for the Pensions Regulator to “scrutinise, clear with conditions or in extreme cases stop” these transactions from happening;
  • Punitive fines for “those found to have wilfully left a pension scheme under-resourced“; and
  • To consider introducing a new criminal offence for company directors who “deliberately or recklessly put at risk the ability of a pension scheme to meet its obligations

Likely to take effect in 2018/19, the introduction of a mandatory pre-clearance regime for corporate transactions, with the ability for the Regulator to block them, marks a radical change in direction. Whether this will have the effect of stopping another BHS, or simply add cost and delay to legitimate commercial transactions may depend on the approach the Regulator takes in practice.

A pre-Manifesto tweet from the Conservatives suggested this regime would only apply to transactions “valued over a certain amount or with over a certain number of members” but we have no details as to what size of transactions will be caught by the notification requirement. I expect that it will only be the larger ones – not least as the Regulator’s response to the DWP Select Committee enquiry suggested it was concerned about being overwhelmed with cases. Presumably there is little opportunity in the current financial climate for extra resources for the Regulator.

Given criminal offences are rare in pensions, the possibility of a new one has already attracted attention from business. However, the “will consider” wording represents a watering-down of an earlier tweet, where it appeared that there would be a clear commitment to do this. This may ultimately fall into the “too difficult” box.

Other proposals

Other proposals include:

  • State pension increases: the basic state pension currently increases by a “triple lock” of the higher of earnings, inflation, and 2.5% – a flagship policy of the 2010-2015 Coalition. Whilst the “triple lock” will continue until 2020 (honouring the 2015 Conservative Manifesto), it will then be replaced with a “double lock” – with the 2.5% minimum increase removed.
  • Pensioner benefits: removal of the Winter Fuel Allowance for all pensioners other than those receiving pension credit benefits was broadly expected, but other universal pensioner benefits (bus-pass, eye-tests and TV licences for example) are all maintained.
  • Auto-enrolment: in addition to continuing its roll-out to small employers, the Manifesto pledges to make auto-enrolment available to the self-employed, and members of the “gig economy” (eg drivers & delivery workers).
  • State pension age: this will “reflect increases in life expectancy, whilst protecting each generation fairly” – ie it will continue to go up, but perhaps not too quickly.

What isn’t mentioned?

A fair amount actually. Nothing about pensions tax relief – the Treasury has had its eye on this for a while now. Nothing about allowing schemes to reduce accrued benefits more easily (eg where the employer is in financial difficulties), and nothing about making it easier for schemes to use CPI rather than RPI for benefit increases (both of these formed part of the February DWP Green Paper).


This is a mixed manifesto, therefore. Pensioners may be disappointed about changes to the triple lock and winter fuel allowance, but pleased at tougher regulation to combat bad business practice relating to pensions. Business will be concerned at the increased regulation (and possible criminal offence), but will hope the new regime will only apply to the largest transactions, and that the Regulator will take a proportionate approach. And the Treasury might be pleased at the absence of any commitments around maintaining the existing tax-relief structure. If the Conservatives are re-elected, it’s going to be an interesting couple of years for pensions!

Edward Brown is a partner at Hogan Lovells