Partner Rosalind Connor comments in Pensions Expert on the key amendments missing from new insolvency legislation
Government attempts to mitigate the risk its new insolvency legislation poses to defined benefit pension schemes have only been partly successful, and company moratoriums could still see schemes lose out on valuable contributions, experts have said.
The corporate insolvency and governance bill received royal assent on Friday, after a sustained lobbying effort by a range of industry bodies, including the Society of Pension Professionals and the Pensions and Lifetime Savings Association, aimed at changing the wording of the bill.
A number of amendments to the bill were tabled in the House of Lords with the aim of restoring protections to pension schemes.
Rosalind Connor commented:
“The more significant amendments don’t seem to have been accepted”.
“Rather miraculously, after they’d ignored us over the pension schemes bill, there were some changes put in as a result,” she said, citing the requirement to notify the PPF and the Pensions Regulator at the start of the process, and the powers given to the PPF to act as creditor.”
“If you’re the regulator and you think this is being used by directors of a company in a way that puts the pension scheme in a worse position, that’s a moral hazard scenario. The regulator will know about that and come talking to directors.”
“But the fundamental problem is that a company that enters a moratorium will not have to pay any new debts, such as top-up contributions or deficit repair payments. Combined with the fact that pension schemes will not benefit from the “extra special treatment” afforded to other organisations and creditors, schemes may stand to lose out under the new arrangements”.
Read Rosalind’s comments in Pensions Expert.
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