UK - The Pensions Regulator has warned investors it will take action against firms triggering pre-pack insolvencies to offload pension liabilities from businesses, delegates heard.
TPR chairman Michael O'Higgins (pictured) said the watchdog was currently investigating firms who trigger pre-packaged insolvencies to offload pension schemes, in a bid to protect member benefits.
He said: "We won't hesitate to use our powers in situations where a weak covenant has been manufactured in a bid to offload the scheme. We're concerned pre-pack deals may be used to offload pension liabilities quickly and cheaply.
"Any employer insolvency crystallises member benefits and if schemes are underfunded, members will receive less benefits than promised."
Pre-pack insolvencies are deals where a firm will purchase senior debt from a lender and then trigger an insolvency to buy the business with the pension liabilities removed.
O'Higgins, speaking to delegates at the final day of the National Association of Pensions Funds conference in Manchester, said the regulator was currently investigating a number of cases.
"We have opened investigations to see if it appropriate to take action. At this stage, I cannot prejudge whatever if any action we are going to take, but we are looking."
The chairman, who has been in the role ten months, also said the introduction of auto-enrolment was pushing defined contribution up the regulator's agenda.
The timetable to introduce auto-enrolment will see the regulator communicate with 1.3m new employers who will be hit by the new requirements.
TPR said it would see 50,000 employers a month coming into auto-enrolment by October 2014, moving up to 200,000 month by October 2015.
O'Higgins said the regulator would take a "segmentation" approach to suit the needs of different employers.
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