UK - The new Pensions Act is a "disaster" which will encourage firms to move scheme operations offshore, senior industry figures warn.
The National Association of Pension Funds, the Confederation of British Industry and senior lawyers believe the legislation, which received royal assent this week, will increase employer costs and complexity so much that some may opt to leave the UK.
It includes provisions for the Pension Protection Fund – which will cost employers an estimated £350m a year – the Financial Assistance Scheme, which employers are being asked to support with voluntary contributions, and greater regulation.
Of particular concern are the so-called “moral hazard” clauses, which many believe could deter corporate transactions, increase complexity and leave individual directors liable for company scheme deficits.
NAPF chairman Terry Faulkner said it may be “quite sensible” for some larger schemes to shift operations out of the UK.
He said: “There is speculation companies will be moving their schemes to Ireland to avoid increasing regulation.
“I suspect UK trustees and beneficiaries may have a view. But for a multinational with schemes in a number of regulatory districts it would seem quite sensible to centralise them as one and move out of the UK altogether – making huge cost savings.”
But he said that such a move would be detrimental to the PPF, and could force the remaining employers to pay higher levies to subsidise those schemes that have left the UK.
Pinsents head of strategic development Robin Ellison agreed. “Companies will be looking at this really hard. You will have more and more schemes going bust, with fewer and fewer schemes contributing to the PPF.”
A CBI spokesman said: “For the many global companies which have the option of locating anywhere in the world, the UK government has to encourage them to come here and encourage those that are already here to stay.
“Things like the PPF are another huge burden that employers will face and the effects of that and other measures are yet to be seen.”
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