Commenting on the DWP’s ‘Protecting Defined Benefit Pension Schemes’ white paper, Steve Webb, Director of Policy at Royal London, said:
"Clamping down on employers who wilfully under-fund their pension schemes will obviously be a popular measure. But proving that someone has wilfully or recklessly failed to fund their company pension is likely to be extremely difficult, and company bosses are likely to have good lawyers. There is a risk that this is simply ‘gesture legislation’ which will never be used in practice.
The other measures in the white paper also look worryingly slow. Helping small pension schemes to consolidate into larger schemes could be helpful, but legislation appears to be years away. With an Act of Parliament likely to have to wait until 2019/20 and further detailed regulations needed after that, it could be a long time before today’s paper has any practical impact.
Even when it comes to takeover activity which could potentially damage workers’ pension funds, the white paper is still talking mainly about ‘voluntary’ notification to the regulators. It looks as though the government’s desire not to interfere in business transactions has taken priority over the desire to protect pensions.
All in all, there is little in this paper that offers reassurance that we will not be reading about another Carillion or another BHS in the months and years to come."
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About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.