UK - Group 4 Securicor has been forced to scrap plans to merge two final salary schemes due to protected rights regulations.
The firm, which was created following July’s merger between Securicor and the security businesses of Group 4 Falck A/S,wanted to merge the £650m Securicor Group Pension Scheme and the £150m Group 4 Pension Scheme to cut costs.
But Group 4 Securicor has abandoned the move because both schemes are contracted-out of the state system on a protected rights basis.
Group pensions manager Sok Wah Lee said the merger could not proceed because regulations prevented the transfer of protected rights.
Lee said: “It is not very easy to do scheme mergers at the moment because we have legislation that says that if you have a scheme with protected rights, and both the Securicor and Group 4 schemes are both contracted-out on a protected rights basis, those rights cannot be transferred.
“We may look at it again in a few years, but while the legislation says that protected rights cannot be transferred, we can’t merge the schemes.”
As a result, the firm is considering setting up a common investment pool for the two final salary schemes to achieve economies of scale.
The trustees will meet later this month to examine the proposals.
Lee said: “It’s something we’ll look into - we haven’t made a decision to go for it yet. Until the trustees have explored this and made sure the advantages outweigh the disadvantages, it will be difficult. We’ve got meetings coming up to look at this and see if it is feasible.”
Lee also revealed that the Group 4 scheme is set to drop Deutsche Asset Management from its fund manager roster for performance reasons.
She said: “Our investment advisers have asked the trustees to review DeAM and that is what they are doing.”
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