UK trustees facing OPRA “planning blight”
UK – The UK’s occupational pensions regulator has published guidance on underfunded schemes in wind-up – but observers say it demonstrates the “planning blight” trustees are facing ahead of final details about financial assistance.
The Occupational Pensions Regulatory Authority has released an update to set out its “expectations in the light of the government’s announcement of the Financial Assistance Scheme earlier this year”. It said the note “provides guidance for trustees on how to act in this interim period”.
It said: “Trustees should continue to actively progress wind-ups where they have already started to wind up. In particular they should identify liabilities and member shortfalls as soon as possible, as this will enable FAS entitlements to be calculated more easily, and proceed to the point of being ready to buy out.”
The legislative framework for the assistance scheme – to which the government has committed 400 million pounds of public funds over 20 years - is intended to be in place by spring 2005. And the details are still being worked out.
“OPRA’s document just highlights the current planning blight,” said Mercer European partner Tim Keogh. “The government has promised a lifeline but can’t yet tell trustees which way to swim.”
“The trustees who face the most difficult situation are those who have realised their scheme’s assets and are about to purchase insurance policies in order to provide at least some member benefits.
“Members may get a better deal if the trustees wait for the assistance plan, but a scheme may find it does not qualify and insurance policy costs rise in the meantime.”