UK - Bradstock-type deals are robbing scheme members of their retirement benefits, the pensions advisory service OPAS warns.
Its annual report – Helping with Pensions – showed that the number of complaints surrounding “compromise deals” between sponsoring employers and scheme trustees was on the rise.
Under current legislation, a solvent employer can wind up its pension scheme and avoid paying the liabilities if its trustees – who are themselves often company directors – agree that to do so would push the firm into insolvency.
The result is that members lose up to 85% of their pensions while the company continues to trade.
Chief executive Malcolm McLean called for wind-up periods to be delayed and independent trustees appointed to schemes in order to help prevent the practice.
“It might be helpful if trustees had the power to insist that the scheme runs as a closed scheme for a while instead of being wound up. This would give more time for the debt on the employer to be made good and for permanent deductions in members’ benefits to be stayed,” McLean said.
He added that if this measure could not be used, a trustee with no links to the firm should be appointed to avoid a “conflict of interest”.
Linklaters pensions litigation group partner Mark Blyth agreed the number of compromise deals was increasing, but said OPAS may not have highlighted the best solutions.
“In my experience the financial difficulties for the employer which cause these deals are too extreme to be solved by just giving ‘more time to pay’.” He added that there would also not be enough time for such deals to be approved by the court.
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Ann Harris OBE and Mike Dailly have been appointed non-executive directors at the upcoming single financial guidance body (SFGB).
Pension schemes are "placing too much focus" on a narrow section of the private debt market where competition is driving down "compelling opportunities", according to Willis Towers Watson.
Barnett Waddingham's head of business development Adrian Cooper has left the consultancy to join TPT Retirement Solutions in a newly-created role.