PMI says surplus issue may breach Human Rights Act
UK – The Pensions Management Institute (PMI) has warned the UK government that recommendations in the Myners report on employer access to pension fund surpluses may be challenged by employees under the Human Rights Act.
In its response to the UK Treasury concerning the Myners report on UK institutional investment, the PMI, notes that the surplus issue is ground that has been trodden before, most recently by the report of the Goode Committee.
The PMI says it believes that the pension surplus of any scheme must be considered on its own merits, adding: “Myners seems to expect that the Law Commission would conclude that employers in balance of cost schemes should have access to surplus.
“ However, there are strong lobbying forces in favour of a different conclusion.”
The PMI argues that whichever way a decision went in the Law Commission could have serious implications, pointing out on the one hand that employers might rapidly close DB schemes if they are told that it is no longer enough just to pay the balance of cost.
On the employee side, the PMI argues that scheme beneficiaries would be able to seek protection under the terms of the Human Rights Act “if their expectations of a share in any surplus are reduced.”
Consequently, while the PMI says it generally supports Myners, it does not support the report on this issue.