UK - The Pensions Regulator has issued a discussion paper and draft guidance to help pension scheme trustees identify deals that would lead to sponsoring employers abandoning their pension plans.
In October, the pensions watchdog launched an investigation into proposed vehicles that could sever the link between employers and their pension schemes.
Having raised its concerns, the regulator has invited industry players to have their say on the issue. The consultation period will ewnd on 9 February, 2007.
Tony Hobman, Regulator chief executive, said: “Our position remains that, in most situations, the best means of delivering pension scheme members’ benefits is for the scheme to have the continued support of an employer of substance which is capable of meeting the scheme liabilities."
Transferring a pension scheme into a new vehicle would see the employer ducking out of paying the debt it owed and effectively leave the plan without the support of a sponsor, he added.
In addition to the discussion paper, the regulator also issued draft guidance for scheme trustees.
“We recognise that the definition of abandonment may not be clear cut in every case," Hobman said. "That is why we believe guidance is needed. It will help trustees identify transactions that may result in abandonment, and guide them on the factors to assess when reviewing the merits of the transaction for scheme members.”
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