04 May 2007
The Pensions Regulator has published guidance for trustees on
the abandonment of defined benefit pension schemes, along with the
responses to its recent discussion paper.
The guidance, which takes into account the responses received,
outlines how trustees should deal with a proposal involving the
abandonment of a defined benefit pension scheme. It underlines the
importance of understanding changes to the employer covenant and
the potential impact on the pension scheme where the link with an
employer of substance is removed.
Comments on the discussion paper were invited from across the
industry and responses were broadly supportive of the regulator's
proposals. Some concerns were raised regarding factors to take into
consideration when deciding whether abandonment would be in the
members' best interests.
Tony Hobman, the chief executive of the Pensions Regulator,
said: "We have taken on board many of the comments and useful
suggestions put forward and this is reflected in the guidance.
"Our position remains that, in cases where there is an employer
of substance, abandonment is unlikely to be in the members' best
interests. We encourage early discussion to consider suitable
alternatives."
The abandonment guidance and consultation responses can be
viewed on the Pensions Regulator's website by clicking here.
