UK - Trustees could be sued if they put a scheme into wind-up before the Pensions Protection Fund takes effect in April 2005, lawyers warn.
They say those who instigate a wind-up before the government safety net is introduced could come under “attack” from members and sponsoring employers.
Pinsents head of strategic development Robin Ellison said: “Trustees are faced with a very difficult situation in which people might come back and say ‘you could have hung on’ until the PPF.
“Those who have no proof they have carefully considered their decision could see claims against them four or five years down the track.”He said trustees should seek urgent advice from professionals to protect themselves against litigation.
Ellison added: “Meetings need to be organised with advisers and these need to be recorded.”
He also called on the government to allow trustees to approach the pensions regulator for approval on their decision to wind-up prior to the PPF.
This “stamp of approval” would provide trustees with proof against future claims.
Fox Williams solicitors head of pensions Ian Greenstreet agreed and added that trustees should cut benefits before opting to close a scheme.
“There is an argument that they should try to keep the scheme going.“The problem with that is if you are still accruing benefits, that adds to liabilities.
“If an employer can’t afford to fund it, you should be thinking about cutting benefits. Trustees need to seek professional advice and come up with a strategy that maximises member benefits.”
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