UK - Any changes to minimum funding requirement regulations must be retrospective, the pensions advisory service OPAS has told the government.
OPAS spoke out after it was revealed that prolonged consultation on MFR could trigger a surge of final salary scheme closures.
The pensions advisory service fears that unless the department for work and pensions “puts its neck on the line” and confirms that any changes will be retrospective, reform would be ineffective.
OPAS chief executive Malcolm McLean (pictured) said that he has written to the government urging it to make its intentions clear.
McLean said: “A statement needs to be made by the government explaining that new MFR rules will be retrospective to the time of the Green Paper’s release.
“This is to prevent solvent employers from closing their schemes now, when the going’s good.”
But Society of Pension Consultants president Donald Duval doubts whether the government will take any action in this instance.
“It would be, politically, a fairly brave move by the government to do this now without consultation with employers. This action might backfire and bankrupt some companies.”
Duval explained that it was important that an employer’s debt on pensions ranked below that for its secured creditors.
If a company closed a scheme because it could not keep it open and the MFR was strengthened retrospectively, the cash needed to make good the debt could pull some companies under.
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