Sir Philip Green vs Select committee
Discussion
wc98 said:
all well and good apart from the fact the british tax payer (again) paid out 367 million quid of family tax credits to bhs employees during the time the slithering 
green removed 400 million from the business. industry captain my arse , just another well connected spiv on the take.
What are you on about? green removed 400 million from the business. industry captain my arse , just another well connected spiv on the take.Should companies not pay a dividend if their employees receive in-work benefits?
What other impediments to investment in UK business can you come up with?
Congrats on hitting 'spiv' on my 'hopelessly naive bingo card'.
Just need 'google tax' and 'offshore tax dodge' for a full house.
Ali G said:
The pension fund is a 'trust' held for the beneficiaries, and the primary responsibilty for ensuring the rights of the beneficiaries resides with the trustees.
An actuarial review needs to be completed every three years (for a db scheme) to advise on surplus/deficit and levels of contribution required to meet the benefits as set out in the pension trust deeds.
The pension fund auditors (independent of any opinion provided by company auditors) are required to provide an independent opinion as to the entire pension fund position (fund value, actuarial value, membership, pensions in payment etc.) annually, provided to the trustees.
If there is a disparity in the level of funding provided by the company and that required by the fund, then they (the trustees) eed to make their voices heard.
The company auditors, as part of thei annual audit, and to provide 'true and fair' should be reviewing funding requirements and reporting any discrepancies.
If CEO/FD do not wish to meet company funding requirements, then actuaries, trustees, auditors may come under pressure and legal advice sought by all parties.
Seems there will be some interesting blame shifting among professional indemnity insurers coming up. Either the trustees, the pension auditors or the company auditors (or all three) have dropped the ball if, as you say, they are audited annually.An actuarial review needs to be completed every three years (for a db scheme) to advise on surplus/deficit and levels of contribution required to meet the benefits as set out in the pension trust deeds.
The pension fund auditors (independent of any opinion provided by company auditors) are required to provide an independent opinion as to the entire pension fund position (fund value, actuarial value, membership, pensions in payment etc.) annually, provided to the trustees.
If there is a disparity in the level of funding provided by the company and that required by the fund, then they (the trustees) eed to make their voices heard.
The company auditors, as part of thei annual audit, and to provide 'true and fair' should be reviewing funding requirements and reporting any discrepancies.
If CEO/FD do not wish to meet company funding requirements, then actuaries, trustees, auditors may come under pressure and legal advice sought by all parties.
Murcielago_Boy said:
Ok - this explains a lot. Great post.
20 years seems reasonable given the extend of the 2008 economic meltdown TBH no?
Also, why didn't the bloody trustees put up a fuss at the time the dividends were paid? They can't have been doing their jobs properly!
Legally, he's done nothing wrong.
Company makes profit. He pays dividend.
Trustees don't do their job. No defined legal obligation to top up pension fund. It doesn't get contributed to.
PLUS he gets unlucky with the meltdown which widens the deficit.
This is purely a moral/ethics debate then. Not a legal one.
Interesting.
IF PG wants to salvage his reputation he'll hand over a few hundred million. But the trustees deserve a massive roasting too.
In fairness to the Trustees of the BHS pension scheme they were pushing for the company to pay more than the £10m a year it was offering to eradicate the deficit (and apparently it was Philip Green himself who stipulated that limit on the annual company contribution). Therefore, I think it's probably a bit over-simplistic to say the Trustees didn't do their job because, at the end of the day, they can't force a company to make contributions. I assume that where trustees and a company can't agree on a recovery plan the regulator can step in but I'm not an expert in this area and I don't know what powers the regulator has to force a company to make good a deficit in a defined benefit pension scheme (if any).20 years seems reasonable given the extend of the 2008 economic meltdown TBH no?
Also, why didn't the bloody trustees put up a fuss at the time the dividends were paid? They can't have been doing their jobs properly!
Legally, he's done nothing wrong.
Company makes profit. He pays dividend.
Trustees don't do their job. No defined legal obligation to top up pension fund. It doesn't get contributed to.
PLUS he gets unlucky with the meltdown which widens the deficit.
This is purely a moral/ethics debate then. Not a legal one.
Interesting.
IF PG wants to salvage his reputation he'll hand over a few hundred million. But the trustees deserve a massive roasting too.
The recovery plan submitted to the regulator was actually 23 years and, while I think other schemes have on occasion had plans with a similar length, I think they have generally been public sector schemes which are (in effect) underwritten by the taxpayer. As I say, I'm no expert in this area but from what I understand 23 years is much longer than is normal for a private sector company recovery plan.
From what I saw of his meeting with the Commons Select Committee today I think Green knows he'll be slaughtered if he's not seen to be doing the right thing by BHS pensioners so fingers crossed he'll stump-up a sizeable sum to make the situation right (or at least more palatable for the pensioners).
There may a fair amount of 'flex' in actuarial assumptions with respect to future liabilities (mortality rates) and assets (future investment performance). From memory, the basis for assessing future investment performance moved away from an 'actuarial basis' towards something similar to 'actual' under IFRS (I think).
I can't quite remember when, or the details, and do not have the time/inclination to look (oops!)
However, the difference in the basis for future investment performance may lead to volatility and liabilities which may not actually crystallise, the result being that there is a lot of scope for various assorted professional bodies to kick the can down the road for quite a while!
Actuarial valuations of db schemes is not a precise science....
I can't quite remember when, or the details, and do not have the time/inclination to look (oops!)
However, the difference in the basis for future investment performance may lead to volatility and liabilities which may not actually crystallise, the result being that there is a lot of scope for various assorted professional bodies to kick the can down the road for quite a while!
Actuarial valuations of db schemes is not a precise science....
Murcielago_Boy said:
OK. Understood.
I own a company and if my staff's "Employer NI contributions + PAYE tax" not kept flawlessly up to date every month HMRC will jump down my throat and close us.
Entirely different.I own a company and if my staff's "Employer NI contributions + PAYE tax" not kept flawlessly up to date every month HMRC will jump down my throat and close us.
Murcielago_Boy said:
Can someone elaborate on the legal obligations a company has to make "contributions" to the Employee Pension Scheme? Surely you need to make an adequate contribution?
But surely also, if the value of the scheme falls, you can't be held responsible to the extent where you must plug the gap?
Yes, if solvent, the employer is responsible for plugging any deficit.But surely also, if the value of the scheme falls, you can't be held responsible to the extent where you must plug the gap?
That is in discussion with the Trustees as to how quickly that deficit should be resolved.
What was not disclosed under project 'Thor?' by Sir PG was whether BHS pension entitlement was to be met in full, or if just 'better than PPF' had been decided.
It may be politic to reinstate full BHS entitlement, and this is probably affordable, but as may have been voiced earlier, may not have been the avenue pursued had not such matters been aired very publically.
It may be politic to reinstate full BHS entitlement, and this is probably affordable, but as may have been voiced earlier, may not have been the avenue pursued had not such matters been aired very publically.
johnfm said:
What are you on about?
Should companies not pay a dividend if their employees receive in-work benefits?
What other impediments to investment in UK business can you come up with?
Congrats on hitting 'spiv' on my 'hopelessly naive bingo card'.
Just need 'google tax' and 'offshore tax dodge' for a full house.
jesus wept. the company did not make the money to pay the dividend. the taxpayer paid most of it.Should companies not pay a dividend if their employees receive in-work benefits?
What other impediments to investment in UK business can you come up with?
Congrats on hitting 'spiv' on my 'hopelessly naive bingo card'.
Just need 'google tax' and 'offshore tax dodge' for a full house.
Ali G said:
The pension fund is a 'trust' held for the beneficiaries, and the primary responsibilty for ensuring the rights of the beneficiaries resides with the trustees.
An actuarial review needs to be completed every three years (for a db scheme) to advise on surplus/deficit and levels of contribution required to meet the benefits as set out in the pension trust deeds.
The pension fund auditors (independent of any opinion provided by company auditors) are required to provide an independent opinion as to the entire pension fund position (fund value, actuarial value, membership, pensions in payment etc.) annually, provided to the trustees.
If there is a disparity in the level of funding provided by the company and that required by the fund, then they (the trustees) eed to make their voices heard.
The company auditors, as part of thei annual audit, and to provide 'true and fair' should be reviewing funding requirements and reporting any discrepancies.
If CEO/FD do not wish to meet company funding requirements, then actuaries, trustees, auditors may come under pressure and legal advice sought by all parties.
You're wrong on a couple of points there. The scheme auditors do not report on the liabilities of a pension scheme. There's a specific statement that's included on one of the primary financial statements that explains that they exclude any liabilities to pay benefits due after the year end. An actuarial review needs to be completed every three years (for a db scheme) to advise on surplus/deficit and levels of contribution required to meet the benefits as set out in the pension trust deeds.
The pension fund auditors (independent of any opinion provided by company auditors) are required to provide an independent opinion as to the entire pension fund position (fund value, actuarial value, membership, pensions in payment etc.) annually, provided to the trustees.
If there is a disparity in the level of funding provided by the company and that required by the fund, then they (the trustees) eed to make their voices heard.
The company auditors, as part of thei annual audit, and to provide 'true and fair' should be reviewing funding requirements and reporting any discrepancies.
If CEO/FD do not wish to meet company funding requirements, then actuaries, trustees, auditors may come under pressure and legal advice sought by all parties.
On the company auditor point, it isn't and shouldn't be their responsibility to review funding either. That's the job of the trustees, the employer and the Pensions Regulator. The auditor reports on whether or not the financial statements are materially true and fair. It's not their responsibility to babysit the trustees and company management.
lauda said:
Ali G said:
The pension fund is a 'trust' held for the beneficiaries, and the primary responsibilty for ensuring the rights of the beneficiaries resides with the trustees.
An actuarial review needs to be completed every three years (for a db scheme) to advise on surplus/deficit and levels of contribution required to meet the benefits as set out in the pension trust deeds.
The pension fund auditors (independent of any opinion provided by company auditors) are required to provide an independent opinion as to the entire pension fund position (fund value, actuarial value, membership, pensions in payment etc.) annually, provided to the trustees.
If there is a disparity in the level of funding provided by the company and that required by the fund, then they (the trustees) eed to make their voices heard.
The company auditors, as part of thei annual audit, and to provide 'true and fair' should be reviewing funding requirements and reporting any discrepancies.
If CEO/FD do not wish to meet company funding requirements, then actuaries, trustees, auditors may come under pressure and legal advice sought by all parties.
You're wrong on a couple of points there. The scheme auditors do not report on the liabilities of a pension scheme. There's a specific statement that's included on one of the primary financial statements that explains that they exclude any liabilities to pay benefits due after the year end. An actuarial review needs to be completed every three years (for a db scheme) to advise on surplus/deficit and levels of contribution required to meet the benefits as set out in the pension trust deeds.
The pension fund auditors (independent of any opinion provided by company auditors) are required to provide an independent opinion as to the entire pension fund position (fund value, actuarial value, membership, pensions in payment etc.) annually, provided to the trustees.
If there is a disparity in the level of funding provided by the company and that required by the fund, then they (the trustees) eed to make their voices heard.
The company auditors, as part of thei annual audit, and to provide 'true and fair' should be reviewing funding requirements and reporting any discrepancies.
If CEO/FD do not wish to meet company funding requirements, then actuaries, trustees, auditors may come under pressure and legal advice sought by all parties.
On the company auditor point, it isn't and shouldn't be their responsibility to review funding either. That's the job of the trustees, the employer and the Pensions Regulator. The auditor reports on whether or not the financial statements are materially true and fair. It's not their responsibility to babysit the trustees and company management.
wc98 said:
a few more words in your explanation of why would be handy.business gets 300 odd million of wage subsidy for employees while removing 400 million. numbers not my strong point, but it will take osbornesque levels of economics to alter my impression of that.
If you don't understand that benefits paid to employees are not the same as cash paid to a business, then I'm not sure where to go from here.Ok, so going by what I've learnt from the kind posters here, this is clearly a total shambles with multiplie parties responsible:
We have;
The trustees
The Pension Schemes auditors.
The Employer (which means Sir Phillip Green)
The pensions regulator
(And potentially the company's auditors too)
No single party came up with an workable plan or took a stand.
And based on this it also strikes me that were the Green family's dividends instead reinvested into BHS we'd still have the same pensions deficit today regardless of whether BHS was a (profitable or not) going concern.....
We have;
The trustees
The Pension Schemes auditors.
The Employer (which means Sir Phillip Green)
The pensions regulator
(And potentially the company's auditors too)
No single party came up with an workable plan or took a stand.
And based on this it also strikes me that were the Green family's dividends instead reinvested into BHS we'd still have the same pensions deficit today regardless of whether BHS was a (profitable or not) going concern.....
sidicks said:
Yes, if solvent, the employer is responsible for plugging any deficit.
That is in discussion with the Trustees as to how quickly that deficit should be resolved.
Hmm. Isn't this a huge can of worms for any employer? Final pension scheme value is wholly exposed to plenty of economic variables, not just the contributions. Doesn't this yield a situation where an employer can have, in effect, a never ending, inestimable, hugely variable liability which never goes away?That is in discussion with the Trustees as to how quickly that deficit should be resolved.
I don't fully understand all the ins and outs of what has happened, but it appears that Green asset stripped the business to pay himself a nice dividend which was put in his wifes name who now lives in Monaco and thus doesn't need to worry too much about tax.
Obviously he owned the business and could do what he liked with it. However he must surely have some responsibility to his 11,000 employees. It strikes me that he totally shafted his workforce and the only thing that will achieve is to alienate 11,000 more people from various levels of management and business owners. John Lewis appears to be a successful company that clearly takes care of its employees who in return work hard for the company, so why is it so hard to stop treating the workforce little better that the fixtures and fittings on the shop floor to keep them as a valuable part of the business so everyone can make a living?
Obviously he owned the business and could do what he liked with it. However he must surely have some responsibility to his 11,000 employees. It strikes me that he totally shafted his workforce and the only thing that will achieve is to alienate 11,000 more people from various levels of management and business owners. John Lewis appears to be a successful company that clearly takes care of its employees who in return work hard for the company, so why is it so hard to stop treating the workforce little better that the fixtures and fittings on the shop floor to keep them as a valuable part of the business so everyone can make a living?
Murcielago_Boy said:
Hmm. Isn't this a huge can of worms for any employer? Final pension scheme value is wholly exposed to plenty of economic variables, not just the contributions. Doesn't this yield a situation where an employer can have, in effect, a never ending, inestimable, hugely variable liability which never goes away?
Hence why few companies still have open DB schemes...However, the liability is clearly ending / finite and estimable!
Murcielago_Boy said:
Ok, so going by what I've learnt from the kind posters here, this is clearly a total shambles with multiplie parties responsible:
We have;
The trustees
The Pension Schemes auditors.
The Employer (which means Sir Phillip Green)
The pensions regulator
(And potentially the company's auditors too)
No single party came up with an workable plan or took a stand.
And based on this it also strikes me that were the Green family's dividends instead reinvested into BHS we'd still have the same pensions deficit today regardless of whether BHS was a (profitable or not) going concern.....
Without stating any impropriety whatsover, by whomsover, and given the circumstances found by economic circumstances outside of any apparent means of influencing.We have;
The trustees
The Pension Schemes auditors.
The Employer (which means Sir Phillip Green)
The pensions regulator
(And potentially the company's auditors too)
No single party came up with an workable plan or took a stand.
And based on this it also strikes me that were the Green family's dividends instead reinvested into BHS we'd still have the same pensions deficit today regardless of whether BHS was a (profitable or not) going concern.....
Follow the money!
Willy Nilly said:
I don't fully understand all the ins and outs of what has happened, but it appears that Green asset stripped the business to pay himself a nice dividend which was put in his wifes name who now lives in Monaco and thus doesn't need to worry too much about tax.
Obviously he owned the business and could do what he liked with it. However he must surely have some responsibility to his 11,000 employees. It strikes me that he totally shafted his workforce and the only thing that will achieve is to alienate 11,000 more people from various levels of management and business owners. John Lewis appears to be a successful company that clearly takes care of its employees who in return work hard for the company, so why is it so hard to stop treating the workforce little better that the fixtures and fittings on the shop floor to keep them as a valuable part of the business so everyone can make a living?
Re-read the last few pages. You're not getting it. If you still don't understand let me know and I will spell it out to you.Obviously he owned the business and could do what he liked with it. However he must surely have some responsibility to his 11,000 employees. It strikes me that he totally shafted his workforce and the only thing that will achieve is to alienate 11,000 more people from various levels of management and business owners. John Lewis appears to be a successful company that clearly takes care of its employees who in return work hard for the company, so why is it so hard to stop treating the workforce little better that the fixtures and fittings on the shop floor to keep them as a valuable part of the business so everyone can make a living?
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