In an attempt to head off the risk of pension buy-out firms removing scheme profits and thereby leaving members more heavily exposed to the chance of schemes falling into deficit, the Pension Regulator is planning tougher new powers.
The trend towards companies outsourcing their pension schemes to “for profit” suppliers, allows surplus assets to be sold off, leaving members or the Protection Fund needing to pick up the bill if the tide turns and deficits appear. These middle-ground companies - between employers and pension providing insurers - do not have to give the kind of guarantees that would be expected of a pension provider.
The regulator will be able to issue Contribution Notices to firms who take any action which undermines their ability to meet the current and future benefits set out for members. Currently these notices can only be issued where firms do not make good any debts within their scheme.
Changes are still being consulted upon but will be enforced retrospectively to 14th April 2008.
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