DB fund members need protection says UK minister
UK- Work and pensions secretary Andrew Smith has said any changes in pensions legislation in the government’s imminent Green Paper must protect existing employees in the case of a scheme being wound up.
Smith’s statement follows the wind up of Maersk’s UK final salary pension scheme, leaving members up to 60% short of the benefits they were expecting.
“It is a very serious situation for the people involved to find that their benefits are less than expected, and the issue needs to be looked into as part of the Green Paper on pensions”, says a spokeswoman for the department of work and pensions.
In March this year, the government did introduce changes in regulations to protect existing pensioners and to ensure that companies paid the wind-up cost of voluntary liquidations. Maersk has stuck to these regulations.
“Changes have been made to protect those relying on the income. Obviously the priority lies with those whose livelihood depends on the revenue which is why the protection of existing pensioners was addressed first,” says the DWP spokeswoman.
The Institute of Actuaries has also pressed for action to be taken to protect current employees. Peter Tompkins, vice president at the Institute says: “the government could act now by doing this through regulations.”
Tompkins added that since the change in regulations in March 2002, the government had remained silent on the issue.