UK - Pension analysts remain split over proposed revisions to the Pensions Regulator's clearance guidance.
On 10 September 2007 Global Pensions reported that the regulator had drafted guidance to clarify how it would approach corporate activity, such as mergers and acquisitions.
The consultation document updated guidance published in April 2005 and the Pensions Regulator said it reflected changes seen in the market place since that time.
These changes include: encouragement to move away from reliance on prescriptive tests in deciding which events to be considered for clearance, to a more principles-based approach; and greater clarity in respect to the level of mitigation that trustees should look for.
Responding to the guidance, Steven Dicker, a senior corporate consultant at Watson Wyatt, said the revised guidance would catch more events that could affect the employer’s covenant.
He said: “We can understand the regulator's rationale in doing this but there is now far less clarity over whether corporate activity will be viewed as material by the Regulator. Employers now face a much more difficult decision as to whether simply to agree a suitable course of action with the trustees, and risk a contribution notice or financial support direction, or apply for clearance and risk the Regulator imposing further security requirements on them.”
Dicker added: "The greater ambiguity about the relevant funding basis to gauge the scheme against when considering such events will spill over into funding discussions and employers will need to rely more heavily on their legal and actuarial advisers to understand how the whole thing fits together.”
Despite his comments, Jane Beverley, senior technical consultant at Punter Southall & Co consulting actuaries, said the new guidance simply reflected the growing complexity of the industry.
Beverley said: “This puts everything on a level playing field. Our view is that the new guidance is catching up with where we are already.”
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