Commenting on the publication today of the Pensions Regulator’s 2019 Defined Benefit Funding Statement, Steve Webb, Director of Policy at Royal London said:
"One of the most striking features of the new statement is the tougher language around companies paying large dividends when their pension scheme is in significant deficit.Pension scheme members are understandably concerned when their pension scheme is well short of the money needed to pay their pensions if they see large amounts of money going out of the business in dividends. Whilst there is nothing wrong in companies paying dividends, it is good to see the Regulator putting greater pressure on firms to make sure that sorting out the hole in the pension scheme gets the attention it deserves. There have been too many cases recently where firms seemed able to afford large dividends and then went out of business leaving the pension scheme starved of cash"
Notes to editors:
The 2018 Funding Statement simply talks about dividends being ‘disproportionate’ to deficit recovery payments, whereas the 2019 statement calls for a strong plan to sort out the deficit in any case where dividends ‘exceed’ deficit recovery payments – a much more specific guideline.
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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.
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