UK - Scheme members at more than a dozen firms could be "robbed of their benefits" following Bradstock-type deals between trustees and employers, OPAS warns.
The pensions advisory service says it knows of 14 firms that have exploited the “loophole” which allows solvent firms to wind up their schemes without paying off any deficit – providing trustees agree.
OPAS first identified the loophole in 2002 when insurance group Bradstock – which subsequently failed – reached a deal with trustees to plug its £14m scheme deficit at the expense of members’ benefits.
OPAS said Bradstock deals mean firms do not have to clear deficits or meet the minimum funding requirement if trustees agree that doing so would “put the company itself at risk”.
OPAS chief executive Malcolm McLean said: “This is a desperate situation for those who have retired or are close to retiring as it leaves them no opportunity to recover the money they have lost.
“Until steps are taken to close or limit this loophole their actions could be undermined and confidence in the system will not be restored.”
And McLean points out that the Pensions Bill does nothing to stop the practice.
He added: “For these people, neither the change to the full buyout requirement for solvent employer wind-ups from June 11, 2003 nor the setting up of the PPF has any relevance. The government needs to ensure this does not get out of control.”
A department for work and pensions spokesman said: “Should members feel trustees are not looking after their best interests they can take action through OPAS or the pensions ombudsman.”
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