UK - Changes to the Section 75 employer debt regulations resulting from government consultations will not be implemented until October 2009.
Speaking at the National Association of Pension Funds (NAPF) annual trustee conference in London, Rosie Winterton, minister for pensions, said the current month-long "informal consultation" is a way of gathering the industry's views on changes to the regulations around areas such as corporate restructuring. (See earlier IPE article: UK consults on employer debt changes)
She said in such a challenging market the government wants to "avoid placing additional regulation on the industry", and is particularly looking for feedback on whether the rules should be modified so corporate transactions will not trigger the section 75 debt if the employer covenant was strong before the transaction and remains strong afterwards.
Winterton said: "I think it's a difficult area and it will be difficult to resolve these issues without creating loopholes."
She admitted following the end of the informal consultation in December, "if necessary, we will start a formal consultation in February next year", before adding any changes resulting from the consultations will be implemented in October 2009.
Winterton also told delegates the government was committed to ensuring the introduction of personal accounts in 2012 will not compete with or result in the closure of existing occupational schemes.
She said: "I know there's a particular concern among trustees that as we move towards personal accounts, it will result in levelling down."
But she claimed a "key finding" of recent research commissioned by the Department of Work and Pensions (DWP) - which is to be published "shortly" - revealed 86% of employers currently contributing 3% of earnings or more to an occupational scheme plan in the future to either maintain or increase that level of contribution to current members.
In addition, Winterton highlighted if an employer did want to make a significant change to its pension scheme, "this would be subject to the employee consultation requirements" which as of this year covers all employers with more than 50 staff.
She said this regulation "ensures all scheme members are aware of the changes and how it will affect their benefits" as well as providing an opportunity for members to have their say on the changes.
"However, none of this means we are in any way complacent in our approach, and we will monitor the situation more closely," added Winterton.
The minister told delegates "now is the time to prepare for the implementation of the reforms", but admitted this will be a "huge challenge" particularly in the current market environment.
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