UK - Shareholders are far happier for firms to have bank debts than scheme shortfalls, Mercer Human Resource Consulting claims.
High street retailer WHSmith has agreed a bank loan of £270m loan and will use £120m to help plug its £215m pension scheme deficit.
But Mercer senior consultant John Exley says bank debts are easier for shareholders to understand because they make deals more transparent and acceptable.
He said: “Bank borrowing is much better from a shareholder’s point of view. If a company wants to invest in new products, shareholders would rather it was done with new money rather than cash borrowed from the pension fund.
“It’s also far better for everyone if the debt is understood by investors. Bank debts are much easier to understand than deficit covenants.”
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers