7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.
In this 7 Days
- Government announces package of corporate governance reforms
- HMT invites Budget representations
- TPR to prosecute director for failing to provide information during BHS investigation
Publishing the Government’s response to the green paper consultation on 29 August 2017, BEIS announced a “world-leading” package of corporate governance reforms aimed at increasing boardroom accountability and enhancing the public’s trust in business.
The Government proposes to introduce new laws to require:
- around 900 listed companies to publish and justify the pay ratio between CEOs and their average UK worker annually
- all companies of a significant (but as yet unspecified) size to publicly explain how their directors take employees’ and shareholders’ interests into account
- all large companies to make their responsible business arrangements public.
The measures will include the world’s first public register of listed companies where more than 20% of shareholders have objected to executive annual pay packages. This will be set overseen by the Investment Association from the autumn.
In addition, the FRC, which sets standards of governance through the UK Corporate Governance Code, has been asked to introduce a new requirement in the Code to help ensure that employees’ interests are better represented at board level in premium listed companies. Under the Code’s “comply or explain” basis, firms would have to either assign a non-executive director to represent employees, create an employee advisory council, or nominate a director from the workforce.
The FRC will also be asked to work with the business community and the Government to develop a voluntary set of corporate governance principles for large private companies.
Stephen Haddrill, CEO of the FRC, said: The FRC is undertaking a fundamental review of the Corporate Governance Code. The Government’s feedback will help inform the development our consultation later this year.”
Commenting on the research and the announcement, Luke Hildyard, stewardship and corporate governance policy lead at the PLSA, said: “Today’s announcement that companies will need to disclose and explain the pay gap between their chief executive and ordinary workers is to be welcomed… We are hopeful that today’s announcement is a concrete step forward which will see a more measured and transparent approach to executive pay.”
The Government intends to bring legislative reforms into effect by June 2018.
The Government is seeking views on what interest groups, representative bodies, and members of the public would like to see in its second Budget of 2017.
HMT has issued guidance on how to submit a representation. Representations should be sent to HMT by 22 September 2017. Members of the public can also submit representations by filling in an online survey by the same date.
Following the Chancellor’s announcement in the 2016 Autumn Statement, going forward there will now only be one fiscal event in each year, held in the autumn. From 2018, there will be a “Spring Statement” to respond to the forecast from the Office for Budget Responsibility, but no Budget at that time. This means that representations will not be heard in the spring.
The date of Autumn Budget 2017 has not yet been confirmed.
Mr Chappell was the director and majority shareholder of Retail Acquisitions Ltd at the time that the company purchased BHS from Sir Philip Green.
TPR has the power under section 72 of the Pensions Act 2004 to require pension schemes, employers and third parties to provide information and documents relevant to its functions. It is prosecuting Mr Chappell for failing to comply with three notices issued under Section 72. He is due to appear at Brighton Magistrates’ Court on 20 September 2017 to face charges of neglecting or refusing to provide information and documents to TPR. Failure to provide such information without a reasonable excuse is a criminal offence which can result in an unlimited fine.