THE government yesterday said it would increase the powers of the Pensions Regulator to protect people whose company pension schemes are involved in a buyout.
Ministers are concerned about the trend for third parties to buy companies primarily to get their pensions assets.
Some parties then sell the acquired business and retain the pension scheme to run at a profit.
The regulator will now have the a
uthority to tell uninsured firms which buy-out companies and pension schemes that they must put in adequate money to protect members' interests.
Mike O'Brien, the Minister for Pensions Reform, said: "I am concerned some emerging business models might not give the same protection for pension schemes as traditionally provided by a sponsoring employer or insurance capital.
"We need to ensure members' interests are protected. I want to guard against pension schemes simply being treated as a commodity to be bought or sold.
"The most effective way to tackle this is to give the regulator the power to require contributions to pension schemes when an employer's actions reduce the security of members' benefits. I want to see pensions secure and promises kept so that members can look forward to a happy retirement."
The change would not target traditional pensions buyout companies, which are backed by insurance arrangements and have to meet capital requirements set out by the Financial Services Authority.
There will be an eight-week consultation on the changes, but the key amendments were effective from yesterday.
John Cridland, deputy director-general of the CBI, said: "We have seen lots of welcome innovation in the pensions industry to help businesses meet their obligations to staff, particularly the creation of pension buy-out firms.
"It is important, however, that these new mechanisms are appropriately regulated to protect individual pension-fund members and the wider business community, which acts as a lifeboat for under-funded schemes through the pension protection fund."
But Cridland warned the government it must take care to raise protection without increasing the regulatory burden and cost for the majority of businesses, which are struggling to maintain final-salary schemes.
The full article contains 355 words and appears in The Scotsman newspaper.
