19 February 2009
The Pensions Regulator (TPR) issued a statement to employers who
sponsor final salary pension schemes regarding the impact of
current economic conditions.
The statement highlights that:
.The Regulator recognises that current economic conditions are
of real concern to employers;
.Employers need to be reassured that the current scheme funding
regime is flexible enough to cope with the economic downturn;
.Where a sponsor company is under pressure there is potential to
renegotiate previously agreed plans to repair pension deficits;
.Trustees should be in a position to understand what is
reasonably affordable for their sponsor, but all unsecured
creditors must be treated equitably and the pension scheme not
disadvantaged;
.The Regulator will continue to apply the flexibilities in the
scheme funding system pragmatically, looking for outcomes in the
best interests of the scheme and sponsor.
Commenting on the statement, David Norgrove, Chairman of the
Pensions Regulator said:
"Trustees of pension schemes in deficit are unsecured creditors
of their sponsoring employer. We are sensitive to the pressures
many of these employers face in current economic conditions with
falling asset prices and increasing deficits. There is no reason
why a pension scheme deficit should push an otherwise viable
employer into insolvency. But the pension scheme recovery plan
should not suffer, for example, in order to enable companies to
continue paying dividends to shareholders.
Any employer who believes that an existing recovery plan is at
serious risk of jeopardising the company's future health or
solvency should discuss this with their pension scheme trustees,
and we would encourage schemes and sponsors to talk to us if they
have concerns."
