Employers that retain a commitment to decent pension provision will find it easier to attract the right people and to keep them, warns Brendan Barber, TUC General Secretary.
Speaking today at the National Association of Pension Funds conference he said: “Pensions have shot up the union agenda. This is not because they have suddenly become of interest to activists and union leaders, but because they are a top concern for people at work.” Read his full speech here
A new package of measures designed to stop employers side-stepping their pensions obligations was recently announced by Pensions Minister, Malcolm Wicks.
The new clauses introduced by Government amendments to the Pensions Bill aim to ensure that companies do not deliberately undergo restructure in order to dump pension liabilities on the on the new Pension Protection Fund (PPF), which is to be introduced in 2005.
A Government regulator will monitor transactions such as mergers and acquisitions for debt avoidance, with the ability to enforce penalties in respect of transactions as far back as June 2003.
“The new clauses should act as a deterrent to employers who are considering dodging their pension obligations, said Malcolm Wicks, Pensions Minister. “They will also provide reassurance to responsible employers that their levy payments will not be subsidising unscrupulous employers.”
“Corporate transactions will now be under far greater scrutiny,” said Tim Keogh, European Partner at Mercer. “The Government is likely to come under pressure to adopt the US system where regulatory clearance may have to be negotiated before deals can go ahead, and this process is bound to cause delays. The uncertainty that the new provisions will create in mergers and acquisitions could be a major stumbling block in negotiations.”
“Companies that try to dispose of divisions with large pension scheme exposures are most likely to be affected. It will be increasingly difficult for employers with large pension liabilities to restructure without fully funding them first,” said Keogh. “Not all will be in a position to do this. A significant minority of companies will find themselves labelled with a health warning.”
He added: “By allowing intervention in corporate transactions, the new provisions give an extra layer of protection to the majority of employers who must fund the PPF.” But, he said: “The brake on activity means the true economic cost of the PPF will be higher than just the levies payable by pension schemes.”
The Pensions Bill was published on 12 February and can be found here
“Working and saving for retirement: Action on Occupational Pensions” was published on 11 June 2003 and copies can be found here
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