Pensions - Articles - Comment on Prime Minister's pledsge to protect pensions

 “Underfunded Defined Benefit schemes are back in the pension spotlight, as Theresa May pledges to deal harshly with unscrupulous employers who deliberately underfund their Defined Benefit schemes putting members’ pensions at risk. The principle is welcome, and will hopefully stop another BHS debacle in its tracks, while helping to restore people’s confidence in pensions as a whole.

 “But in practice there’s a careful balance to be struck. Defined Benefit schemes will need to move up employers’ agendas so they are not neglected, and members benefits are protected. But concurrent to this, the law shouldn’t be so rigid that it strangles corporate activity, which may turn out not to be in employees’ interests if the company struggles and ends up going under.

 “Giving the Pensions Regulator more powers to block takeovers if they put Defined Benefit schemes at risk could be a double–edged sword. Realistically the Regulator isn’t equipped to review all potential takeovers, many of which may not take place. To target takeovers where Defined Benefit schemes are at most risk means it would have to actively monitor the corporate landscape and identify all possible scenarios. Either way the Regulator would need to be ‘resourced-up’ paid for by higher scheme levies.”