Please find a comment from Kate Smith, Head of Pensions at Aegon: “The government has finally published their long awaited Defined Benefit White Paper, which includes measures to protect against a small minority of unscrupulous employers. It is sending out a loud and clear message that reckless behaviour from employers which puts DB schemes at risk will no longer be tolerated. Those employers found guilty of deliberately putting their DB scheme at risk can be heavily fined and risk a criminal record.
“It’s timely that the government is also looking to strengthen the Pension Regulator’s powers around corporate transactions which could negatively impact their DB Scheme.
“It’s also positive that the Pensions Regulator will be setting out a Code on clearer funding standards for ongoing schemes. Taken together these new powers will strengthen DB schemes and give greater protection to members’ pensions and in turn should reduce the numbers of DB schemes falling into the Pension Protection Fund. There’s more work to be done, but this is a giant step in the right direction.”
Lynda Whitney, partner at Aon, said: “We agree with the White Paper’s view that most schemes are well managed. We also support the power to punish those who deliberately put pension schemes at risk but expect this will be very few cases at the extreme. We hope that the strengthening of the notifiable events framework will be effective and will not limit company’s ability to undertake normal mergers, acquisitions and disposals - but the Pensions Regulator (tPR) will need the resources to ensure that this extra demand can be met.
“We will await with interest tPR’s revision of the Funding Code and associated guidance. The regulator’s annual funding statement, likely to be issued in the next few weeks, could show direction of intent. Until the consultation on the Code it will be hard to see the detail of what strengthening these funding standards will mean in practice, but we called for the DB chair’s statement so we are glad that it has been included.
“As regards benefit compromise options, we believe they should only be used where the pain is being shared with all stakeholders and where it offers members a better outcome than entering the PPF, but the current process for achieving this is complex and puts members at risk.”
‘Protecting Defined Benefit Pension Scheme’
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