UK - Trustees have been urged not to prolong the life of stricken schemes in the mistaken belief members will miss out on compensation.
Lawyers say trustees have been reluctant to “put a scheme to bed” since the government’s £400m compensation package was unveiled in May for fear it would disenfranchise members from assistance.
But the department for work and pensions said this would not be the case and trustees should proceed with wind-up arrangements in the knowledge members would be covered.
Head of the DWP’s financial assistance scheme Mike LeBrun gave the clearest indication yet of the shape of the £400m rescue package at a Higham Group breakfast briefing.
Higham partner Russell Agius said that even though details had not been finalised, this was a clear encouragement to trustees.
He said: “This is the first time we have had clarification in a public forum and I’m sure the industry will welcome it. There is currently so much uncertainty for trustees involved in wind-ups, it is good to receive this reassurance from the DWP.”
But a leading lawyer believes details are still lacking.
Hammonds partner Francois Barker said: “This still looks to be an idea without much detail. Early indications are it is not going to be very generous – offering far less than the PPF – and may be politically skewed to benefit those most in need and who present the biggest challenge to politicians.”
LeBrun told the forum that schemes which began winding up before 1997 would not qualify for assistance, and that schemes which began after May 14 would also not qualify.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.