UK - Trustees need greater awareness of a sponsoring employer's financial health to comply with new regulations, a leading accountant and auditor warns.
Ernst & Young said greater awareness was particularly crucial in today’s climate where, despite improving equity returns, liabilities were still increasing which meant scheme deficits would persist.
Corporate restructuring partner Hunter Kelly said the solvency and trading prospects of the employer would need to be considered so that trustees could ensure deficits were funded in an appropriate timescale without jeopardising the long-term viability of the employer.
These obligations, Kelly said, were adding to an already onerous task facing trustees.
He said: “There are real business problems being experienced as a result of defined benefit pensions – funders and trading partners are taking an increasing interest in the pension position and credit limits and cash is getting tighter.
“The Pension Protection Fund cannot currently be relied upon when a corporate’s future is uncertain.
“And even if the position appears to be secure now, reviews should be carried out regularly with the co-operation of the employer wherever possible”.
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