UK - Plans to make pensions liabilities transferable under law will have a devastating impact on corporate rescues, a leading recovery specialist claims.
Begbies Traynor estimates a third of the businesses it tries to save, close because of the “inflexibility” of current regulations covering the transfer of employment rights – TUPE.
And proposals to bring pension liabilities within TUPE will make the situation much worse, it warns.
Senior London partner Nick Hood explained: “Proposed changes to TUPE will increase the burden on new employers, forcing them to provide employees of businesses they take over the equivalent of a stakeholder pension scheme with mandatory rates of employer contribution.”
He believes this extra cost burden could be enough to affect the sale of bankrupt firms in the UK.
“The entire commercial world is scared of the whole pensions thing.
“Pensions is a dirty word, and the last thing the buyers want is for lawyers to tell them that not only will they have to pick up all these employees’ rights and continuity services back to year dot but you will have to stick them in a pension scheme, too.”
The government has vowed to consult on changes to the TUPE rules to make them more flexible for businesses being sold through a formal insolvency procedure like administration.
But Hood fears the whole process does not have sufficient urgency to stem the fall-off in business sales.
Jonathan Stapleton asks whether newly-accredited professional trustees should be a statutory fixture on pension scheme boards.
Savers are being warned by the Insolvency Service to guard their pension pots from investment scammers and negligent trustees as it winds up 24 companies.
Respondents say they should only be required in certain situations as the system is not broken.