Faith Dickson, partner at Sackers, comments on the Work and Pensions Committee’s report on the future of DB schemes: “Although they haven’t hit the headlines, the suggestions that TPR should be less reluctant to use its powers and that we should refine the tools available to stressed schemes are welcome.
“Giving TPR the power to levy punitive fines on employers to ensure they support struggling schemes might sound impressive, but I believe it is unlikely these powers would be used in practice. If they were, the most likely outcome is further delays while employers challenge the fines.
“While the Committee has criticised BHS’s 23-year recovery plan, the truth is that an increasing number of schemes are going to find themselves in a similar position, unless they adopt a less prudent approach to funding and investment, an overly aggressive approach I doubt the Committee is aiming for.
“Less headline grabbing, but more important, would be making regulated apportionment arrangements available even before insolvency is inevitable within 12 months, to give breathing space to stressed schemes and employers to find a solution. And the ability for trustees to propose changes to scheme indexation rules in the interests of members would also be a big step forward.
“We need to move away from thinking these changes are taking benefits away from members. In reality, they can make businesses sustainable and open the door to schemes delivering benefits to members over the long term, when they might otherwise only have PPF compensation.”
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