UK - Industry heavyweights are mounting pressure on the government to change MFR regulations ahead of any consultation on the pensions green paper.
The campaign – spearheaded by OPAS chief executive Malcolm McLean – comes as two companies wind-up their final salary schemes with insufficient funding to cover member liabilities.
The actions of both Blyth & Blyth and Thomas Armstrong (Holdings) will together leave some 550 members faced with massively reduced pensions entitlements.
The companies, according to McLean, are hiding behind the letter of the law by only funding their schemes to the MFR level and massively “short changing” members.
He urged the government for action. “There is no need to allow this important issue to become bogged down in the green paper and the lengthy consultation period which will ensue.
“Indeed, if such a change were to be foreshadowed in the paper, it could turn what is at present a trickle of wind-ups into a veritable flood.”
He stressed that, if the political will was there, a further change to the MFR regulations could be made quite quickly and without a requirement to invoke primary legislation.
Buck Consultants head of technical services Kevin LeGrand backed McLean’s plight and said certain issues need to be fast tracked by the government.
He said: “There’s a lack of confidence in pensions among employers and individuals.
“Something needs to be done in a hurry to get confidence back. If you have issues like MFR that are reducing that level of confidence it needs to be addressed quickly.”
Senior industry figures including PriceWaterhouseCoopers partner Peter Tompkins and Watson Wyatt partner Nigel Bodie both agreed that it would be in the government’s power to raise the level of MFR to protect members benefits on wind-up.
*Engineering consultant Blyth & Blyth has placed its £11m scheme into wind-up this month because it could not afford an increase in its contributions to plug a £6m deficit.
Its trustees wrote to 200 scheme members stating the company is of the view that “it is no longer practicable” to continue the scheme and stated that members are “unlikely” to get their full benefit.
Building contractors Thomas Armstrong (Holdings) has also placed its £10m scheme into wind up with a MFR funding level. Some 350 Members are expecting to only see 50% of their pensions entitlement as a result.
This follows on from Maersk’s decision to wind-up its DB scheme – also funded just to an MFR level.
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