New powers for Pensions Regulator as buy-outs surge

by Gill Montia

Story link: New powers for Pensions Regulator as buy-outs surge

A recent surge in the acquisition of pension schemes has prompted the Government to install new powers in the Pensions Regulator.

Trustees of company pension schemes have become increasingly keen to offload the responsibilities and balance sheet liabilities of company pension schemes but the Government is keen to ensure that schemes are not treated as commodities, to be bought and sold.

To protect members’ interests in the future, the Pensions Regulator will be given the power to demand that buy-out companies make extra contributions to funds.

Last year, the regulator intervened in the case of the proposed sale of the Telent pension scheme to Pension Corporation, over concerns that the new owner might adopt an investment policy aimed at benefiting its investors.

It appeared that Pension Corporation had plans to release money set aside in an escrow account and this would have been detrimental to scheme members.

In January of this year, Paternoster, the pension schemes acquirer, forecast that buyouts in the sector would at least double in value during the 12 months ahead.

The total market for 2007 is estimated at between £3 billion and £3.5 billion, putting the forecast for 2008 at around £6 billion.

Paternoster and Legal & General are expected to acquire the bulk of the business; AIG and Prudential are also active in the sector.