UK – As part of its new “pragmatic” approach, the Occupational Pensions Regulatory Authority has started to meet employers and trustees where schemes have funding problems.
“As part of our risk-based strategy, we have initiated a pilot study into the value of holding meetings with relevant parties where schemes have funding problems,” OPRA says.
“Typically these would be in situations where the scheme is significantly underfunded and the employer claims to be unable to afford the contributions under the minimum funding requirement MFR.”
“Our attendance at meetings has been universally very warmly welcomed and seen as positive by both the principal parties and their advisors,” OPRA says in its August Bulletin.
“Undoubtedly, such meetings enable us to understand more clearly the situations faced by schemes. We also believe we are able to explain better the complex requirements of an MFR extension to both the trustees and the employer.”
The new approach is part of a change of tack at the regulator, which is focusing less on minor breaches than on more serious risks to members’ interests. In the April-June period this year, for example, the OPRA board considered 39 cases, less than half the number of the same period in 2002.
OPRA admits that it can’t “wave a magic wand” where there is no money. And it notes that in many cases there will be “severe conflicts of interest” where a company’s senior management are also trustees.