UK - Opposition MPs are urging the government to take action to halt the rash of closures of defined benefit schemes.
Conservative MP for Bournemouth West John Butterfill, who is chairman of the All Party Group on occupational pensions, wants the government to reinstate advanced corporation tax credits and change the Accounting Standards Board views on FRS17.
He said: “The abolition of ACT exemptions now represents a £5bn a year raid on pension schemes. The government should be putting this back.”
He also called the FRS17 rules “potty” and said the government should ask the ASB to look at them again.
Butterfill’s calls for action were joined by Liberal Democrat work and pensions secretary Steve Webb MP who accused the government of “sitting idly by” while companies closed their schemes.
He said: “The government should launch an immediate investigation into the reasons why companies are pulling out of final salary schemes.”
Buck Consultants head of technical services Kevin Le Grand, commenting on Butterfill’s proposals, said: “The Chancellor first presented ACT in his Budget as something that would have little or no consequence on pension schemes, as there was all these surpluses sitting there in pension schemes at the time.”
Le Grand saw the restoration of such exemptions as beneficial, but explained that since the exemptions were scrapped companies had moved away from giving the high dividends that it taxed so heavily.
He also doubted the chances of changing the ASB’s mind on FRS17.
He pointed out that all these arguments were put to the head of the ASB, David Tweedie, when “he came up with this new accounting standard”.
Le Grand added that Tweedie had insisted that these changes were in line with International standards and “were coming whether we liked it or not”.
This issue was echoed in Parliament last month by Treasury economic secretary Ruth Kelly who in answer to a question about the negative effect of FRS17 on pension schemes, said that this was purely a matter for the ASB.
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