DEPARTMENT FOR WORK
AND PENSIONS News Release (PENS-065) issued by The Government News
Network on 14 April 2008
The Government
plans to increase powers requiring employers to provide
contributions to a pension scheme if their actions could threaten
the security of members' pensions.
The changes would give the Pensions Regulator stronger powers to
reduce the risk to members' interests by scheme changes or
corporate transactions. They would apply to an employer or their
associates, including investors in the employer who might seek to
profit from the scheme. There will be an eight week consultation
on these changes.
Minister for Pensions Reform Mike O'Brien said:
"The Pensions Regulator has done an excellent job in recent
years but we need to ensure its powers keep pace with developments
in the pensions market.
"Innovation is welcome, but 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. I spoke about this in a recent debate in the
Commons. 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 problem 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."
Mr O'Brien said the powers would only be targeted at risky
situations to avoid putting onerous burdens on employers. The vast
majority of pension schemes would not be affected.
He added: "These measures will also avoid new costs being
placed on the Pension Protection Fund, which could ultimately be
passed on to responsible employers through the PPF levy.
"The proposed changes would also allow the Pensions
Regulator to require an employer or associate to make additional
contributions to a scheme where a 'bulk transfer' has
been carried out and was detrimental to the interests of members."
A statement setting out the proposals has been published on the
DWP website today, which will be followed by a formal eight-week
consultation period.
The Government intends that the core
amendments should be effective from the date of this announcement
(Monday, April 14); one minor amendment would be effective from
April 27, 2004.
The changes require Parliamentary approval, and DWP intends to
legislate at the earliest opportunity.
Notes to Editors
1. The full statement can be found at http://www.dwp.gov.uk/pensionsreform/latest_news.asp
2. The changes will not affect the vast majority of pension
schemes. The Regulator has demonstrated that it takes a
proportionate approach to regulating pension schemes, and only
uses its powers where it is reasonable to do so. The Government
will ensure new powers are appropriately targeted only when an
employer's actions put pension scheme members' benefits
at risk.
3. A bulk transfer is a transfer of members, assets and
liabilities to another pension scheme.
Textphone: 020 3267 5145
Website: http://www.dwp.gov.uk