UK - The government has been urged to close a loophole which allows solvent overseas corporations to walk away from their pension liabilities in the UK.
The call from Liberal Democrat spokesman Vincent Cable (pictured) is backed by regulators who want more “leverage” to chase parent firms.
Cable pointed out that around 700 members of the Data General Pension Scheme were still battling for benefits they lost when the firm’s US-based parent, technology giant EMC Computer Systems, reached a £1.2m compromise deal with trustees.
EMC told the trustees – two-thirds of whom were EMC executives – that the scheme had liabilities of £17m.
The deal cost scheme members up to 70% of their pension entitlements.
But the Occupational Pensions Regulatory Authority told PP that publicised wind ups of UK subsidiaries – such as those by Danish shipping firm Maersk and US engineering giant Parsons – were just the “tip of the iceberg” and it was investigating a number of cases.
OPRA spokesman Nick Edmans said the regulator would welcome any changes in the law which gave it more “leverage” to chase parent firms.
He said there was still a “gaping loophole” despite the introduction of full buyout requirements in June 2003 limiting the problem to subsidiaries which went into liquidation.
Edmans also warned that members of collapsed schemes may not, under moral hazard clauses, be entitled to payment from the Pension Protection Fund if a profitable non-UK parent company refused funding.
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