UK - British employers would significantly reduce the burden of their ‘pension promise' if they could pay the government to take contracted-out liabilities back into the state scheme, David Willetts (pictured) MP has argued.
Proposing a government-sponsored arrangement which would remove a significant part of the pension promise from the company’s balance sheet, the Havant MP and senior adviser to Punter Southall said: “If companies are able to pay the government to take back the obligation to pay a guaranteed minimum pension then this could be a significant step forward in capping their pension costs and reducing liabilities.”
Under the proposal, schemes would be encouraged to contract out by means of a rebate of part of the employee and employer National Insurance (NI) contributions, paid directly into the pension scheme.
Urgent steps were necessary, the former shadow secretary for work and pensions said, to prevent the emergence of “zombie companies struggling to pay their pension costs, incapable of expanding and too toxic to be taken over.
“This is bad for British business and bad for the British economy,” he continued. “Even if it is not a challenge that Adair Turner will address it is something that all of us who care about the future performance of the British economy need to focus on.”
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Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point