NEWS   |    May 15, 2018

Rosalind Connor comments in FT Adviser on Gov’s defined benefit white paper risks sending schemes into PPF

New legislation expected to come into force from the government’s defined benefit (DB) white paper has the potential to increase company insolvencies and send their schemes into the pensions lifeboat.

Rosalind Connor said that future legislation, as it interacts with existing insolvency regulation, might prompt companies to give up sooner than intended.

The new rules, as laid out in the white paper, might mean that if companies pay money to anyone other than the pension scheme, they are at risk of some kind of demand from The Pensions Regulator, even if that was the appropriate and right thing to do, she said.

And if the firm pays the pension scheme before any other creditor, she said it might get in trouble with the insolvency legislation, which has a lot of controls about not preferring one creditor over others, particularly when the company is in financial difficulties.

Rosalind said: “There is a very obvious solution [for this problem], which is filling for insolvency.

“The worry with this is that it will increase the number of people who will file for insolvency earlier, and I am not sure that was what was intended [with the new rules].”

Another reason for company directors to give up more easily is that some of the new rules may come into force with a retrospective effect, Rosalind argued.

Read Rosalind’s comments in FT Adviser

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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