13 Jul Chris Mullen discusses Lady Barbara Judge’s comments on the PPF

On the 30th June Lady Barbara Judge CBE stepped down as Chairman of the Pension Protection Fund. When discussing the future of the PPF Lady Judge addressed three areas:

  1. PPF blocking M&A deals that could harm pension scheme members
  2. The creation of a “blue ribbon” committee to propose long-term solutions to the underfunding of pension schemes
  3. Better training and remuneration for pension fund trustees

Chris Mullen discusses these points in detail:

  1. On idea of blocking M&A deals – ‘We don’t think such a measure would be workable in practice; potentially tens of millions of pounds’ worth of transactions would be held up indefinitely while a regulator’s staff tried to work out whether the deal could cause some possible detriment to pension scheme members further down the line – something that even those who are most expert in measuring sponsor covenant strength would struggle with. Deals would move elsewhere and UK companies with pension schemes would be placed at a serious disadvantage compared to international competitors. I’d be very surprised if the Regulator would seek such powers.”
  2. On the PPF needing a new committee – ‘The PPF is entirely funded by the pensions industry and has provided enormous levels of security to pension scheme members, particularly the lower paid. We think there has to be some sense of proportionality with the protections offered for people’s other investments. Many people don’t have significant assets in pension schemes but do hold other investments such as bank deposits and property – why should those who are fortunate enough to have pensions be singled out for greater and greater security when those with other investments are left behind? That doesn’t seem to represent a level playing field.”
  3. On trustee training and payment – “ We would always advocate the pension trustees be properly trained and in our experience companies and trustee boards do take their responsibilities very seriously. However, payment for trustees opens up a can of worms about whether trustees are acting as such for the money and if so, whether higher standards of professionalism should be demanded of them. In our view, there is room for both lay, unpaid trustees – perhaps representing the workforce of the pensioners of the fund – and one or two experienced professionals on a trustee board. Such a combination provides the best of both worlds.”

 

You can read Lady Judge’s comments in the Financial Times here