UK - The UK Pension Regulator (tPR) should take a long term view on pension funds before curtailing corporate activity by intervening in takeovers where pensions-related issues arise, consultancy firm Aon has claimed.
According to Aon, speculation that corporate activity would be curtailed by the regulator's intervention was renewed when a number of recent high profile takeovers were derailed by pensions issues.
Paul Dooley, senior consultant and actuary commented in a statement: "Where companies are experiencing trading difficulties it is crucial that TPR supports those employers that are working together with trustees to meet their common goals."
In certain cases, even though pension scheme funding levels are likely to have deteriorated, it may be in the long-term interests of the pension scheme members for employers to pay lower pension contributions for a period - perhaps with some other form of security being provided - until the commercial environment improves, he argued.
That said, the consultant admits figures in a new study - questioning around 100 managers of DB pension scheme provision in the UK during the first quarter of 2008 on the risks of defined benefit pension schemes, suggest that the impact of such intervention, while important in specific cases - is limited to a minority of companies.
Almost three-quarters of respondents believed their dividend policy would be unaffected - up from 60% in the previous employer survey.
However, one-sixth (14%) of employers believe TPR has affected, or will affect, their policies on acquisitions, disposals or restructurings, as TPR's powers to intervene in acquisitions, disposals and restructurings are now well embedded.
Dooley added that in light of the increase in TPR's legislative powers, following last year's investigations into certain ‘non-insured' deals, "it certainly seems possible that this regulatory attitude will prove to be a stumbling block to such acquisitions in the future."
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