NEWS   |    March 14, 2017

Anna Rogers comments in Engaged Investor on PLSA’s DB taskforce report

The Department for Work and Pensions’ recent green paper concluded there was no crisis in DB funding. It made some positive noises about the benefits of consolidation, but came up with little of substance on how this might be achieved.

The Pensions and Lifetime Savings Association has taken a very different tack. In the final report of its DB taskforce, the trade body warned that members of weak schemes had just a 50/50 chance of getting their benefits in full. The taskforce’s proposed solution is radical: ‘superfunds’ that will absorb single-trust schemes, leaving their former sponsors free of liabilities.

Transferring members en masse will throw up serious legal considerations. Anna Rogers commented: “The taskforce is looking at the macro level but the law protects the rights of individuals. Current law offers mechanisms based on informed consent or overall equivalence, both on a member by member basis.”

Anna said the equivalence test is not too tricky when comparing benefits packages, but factoring in the value of employer covenant and PPF compensation is no easy task: “The government can only sign off on legislation that meets the human rights test, and we saw in the Brewster case that pensions can be protected by human rights law. Consolidation would bring a tidal wave of work for advisers, so this isn’t vested interests speaking.”

Read the full article in Engaged Investor here.

The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. Arc Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.

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