UK - Pension funds could suffer if companies use bond issues to plug holes in their final salary scheme, a consultant warns.
Marks & Spencer has issued a £400m bond issue to cover a £1bn deficit in its final salary scheme and last year BP issued corporate debt to help fund a £790m cash injection.
But if trustees put some or all of the proceeds from a bond issue into equities, the strategy could backfire, Hewitt Bacon & Woodrow associate Martin Kraus warns.
He said: “It is not very secure to put it in the stock market. If trustees put the proceeds in bonds instead of equities then they are more closely matching the liabilities of the scheme which is less risky.”
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The trustees of the Kodak Pension Plan No.2 (KPP2) have said it will likely enter the Pension Protection Fund (PPF) in "due course" after reviewing the scheme's investment in Kodak Alaris.
A US company has completed a £285m pensioner bulk annuity for around 1,100 of UK members with Legal & General (L&G).
Former BHS chief Dominic Chappell has been accused of trying to rewrite history as he seeks to overturn a conviction for failing to hand over information to the regulator.