The UK’s pensions regulator has asked for greater powers in the wake of the collapse of BHS, suggesting it should be involved in merger and acquisition (M&A) talks where a pension scheme is significantly underfunded.

Lesley Titcomb, chief executive of the Pensions Regulator (TPR), also raised the possibility of the watchdog’s having to grant pre-clearance to certain M&A activity.

She conceded, however, that any such deals were usually time sensitive, and that pursuing such an approach would have “significant” resource and budget implications.

Writing to Frank Field – the Labour party chair of the work and pensions select committee, which is investigating the collapse of BHS and the impact on its pension funds – Titcomb argues that access to information is crucial to the regulator’s work.

She adds that its ability to access data, through mandatory disclosure from sponsors and trustees, is “inflexible” at times.

“It could be useful to consider whether a more flexible information-gathering power, along with a general duty on parties to cooperate with the regulator, would improve the efficiency and effectiveness of our information gathering,” she writes.

Titcomb’s call for TPR to be involved in M&A activity seemed to fall short of mandating that such deals receive approval from the regulator before they can proceed.

Stressing the “vital role” of M&A activity to the UK economy, Titcomb said such transactions were time-sensitive.

However, she did propose that TPR be privy to future discussions of M&A activity where the pension fund is a significant debtor due to its funding level.

“We can see a case for a more targeted solution such as imposing a requirement to involve TPR in certain circumstances – for example, where there is significant underfunding, and/or the transaction puts the security of the scheme at risk,” she writes. 

“Further work would be needed to determine how such a requirement could work in practice, in particular on where the onus for notifying TPR might lie.”

Titcomb also questions whether trustee boards should be given the power to be the “first line of defence” and able to request further information from corporate sponsors in the event of a merger.

The UK has previously considered giving trustees an increased role in scrutinising merger deals, consulting on the matter in 2012.