16th January 2018 Anne-Marie Winton comments in The Times Law Brief on the transfer of Carillion’s DB members to the PPF
The collapse of Carillion and its impending transfer of some of its defined benefit members (DB) into the Pensions Protection Fund (PPF) has raised questions about the sustainability of existing pension laws.
Commentators have expressed dissatisfaction with pension legislation and the lack of flexibility afforded to struggling companies.
Anne-Marie Winton commented:
“Given the speed at which Carillion collapsed, there appeared to be no time to attempt to save the company by separating it from its 13 defined benefits schemes through the use of a regulated apportionment arrangement (RAA).”
She commented further that “one of the premises of an RAA is that there is a company that is worth saving at the end of it”, speculating that Carillion’s other problems might have disqualified it from this solution.
Anne-Marie added that the process for granting RAAs could be improved, by removing the 28-day waiting period, which could have frustrated other fast-moving deteriorations in sponsor health, and by giving a clearer definition of the 12-month insolvency rule.
She also supported companies being made to disclose a range of deficit calculation in their accounts, so investors are not fooled by the often smaller IAS 19 deficits of schemes.
Anne-Marie predicted that Frank Field, the Labour MP who chairs the House of Commons work and pensions committee, “will be writing to the trustees of the pension schemes and to the pensions regulator to get them to confirm the proper discharge of their duties”.
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