UK - Trustees are being urged to re-evaluate compromise deals drawn up in the past year after the regulator warned it would consider retrospective action.
New guidelines set out the Occupational Pensions Regulatory Authority’s powers to “undo” compromise agreements made since June 11, 2003.
Under the Pensions Bill, the regulator will be able to intervene if trustees have not taken “certain key actions” before reaching an agreement.
These include considering all alternatives to compromise and obtaining independent professional advice, with involvement from an investigating accountant or an insolvency specialist.
Law firm Wragge & Co partner Jason Coates said trustees involved in such deals would be “busily checking and double checking” whether they met requirements.
He said: “On the whole this list of expectations seems sensible but the regulator needs to be careful it does not overstep the mark and go beyond the law.
“OPRA is obviously doing its utmost to prevent calls on the PPF but with retrospective action, it is treading a very fine legal line.”
OPRA said it was concerned that conflicts of interest meant decisions were being made by trustees which led to unnecessarily large reductions in members’ benefits.
For compromise deals the regulator will be able to appoint an independent trustee if it considers the current trustees not to have the “knowledge, ability or willingness to act in a proper manner”.
Chief executive of the pensions advisory service, OPAS, Malcolm McLean described the guidelines as “very helpful and necessary”.
He said: “I have felt for some time that this has been a bit of a grey area and the publication of this new OPRA guidance is very opportune. OPRA’s expectations of trustees are clearly spelt out as are the actions OPRA itself can take to protect members’ interests.”
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