09 April 2009
According to Towers Perrin consultant Dave Roberts, company
pension schemes with sponsors outside the European Economic Area
(EEA) are at risk of being denied Pension Protection Fund (PPF)
coverage despite paying the levy.
Mr Roberts said his firm is suggesting non-EEA companies seek
legal advice or lobby regulators to close a loophole in the entry
rules that could prevent their pensions from making use of the
PPF's safety net.
Mr Roberts went on to say that while UK and EEA companies with
qualifying pension schemes can petition directly to the PPF if the
company goes under with insufficient fund assets, this was more
problematic with sponsors domiciled outside the EEA.
"If you have a foreign company, it's harder. You need to get an
order from a UK court to wind up the assets," he said. He went on
to warn that companies ran the risk of courts denying their claim.
To his knowledge, and others, this court system has never been
tested.
Mr Roberts said the number of firms this would likely affect is
small but the loophole is all the more important now that the
economic downturn is hammering company pension scheme assets while
threatening companies' livelihoods.
