Government to review pension scheme protection
The Government has announced a review of employers’ pension obligations to make it easier for businesses to restructure, an increasingly common scenario in the current economic climate.
The law in question – Section 75 – was passed in 2004 after Danish firm Maersk tried to avoid its UK pension liabilities despite remaining solvent. Since then businesses have been required to clear pension scheme deficits when they face takeover or restructuring.
However, calls from businesses for the law to be reviewed have grown louder as economic difficulties have exacerbated the demands made of employers. While restructuring has grown more likely, falling stock markets have increased companies’ pension shortfalls.
"The huge cost of defined benefit pension schemes is a particular problem for employers,” says Jonathan Mansfield of employment solicitors Thomas Mansfield. “Our experience is that such schemes are increasingly rare outside the public sector. However it is to be expected that employees with these rights will seek to hold on to them and where necessary litigate.”
The public consultation is expected to begin in February with changes to be introduced in October 2009.
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