The Pensions Regulator has called for companies to prioritise pension payments over shareholder dividends amid rising pension deficits in the retail sector.
In its annual funding statement the pensions watchdog called on pension fund trustees to take a tougher stance on companies that pay out to their shareholders before recouping pensions deficits.
“Trustees need to ensure that contributions to the scheme feature prominently in their employer’s considerations and that its legal obligations to the scheme as a creditor are recognised ahead of shareholders with no legal entitlement to dividends, but who may exert pressure on the employer to obtain them,” the regulator said.
“Where this is not adhered to, we will consider opening an investigation.”
The news comes as the Pensions Regulator continues its battle with BHS staff to recoup the £571 million pension deficit left by the company when it collapsed, effecting 22,000 peoples’ pensions.
Last week the Institute of Directors took a similar stance calling on the newly elected government to introduce legislation to stop privately owned companies paying out disproportionate dividends.