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| Version 2 | Version 3 |
|---|---|
| Review of company pensions laws | Review of company pensions laws |
| (about 7 hours later) | |
| Pensions minister Rosie Winterton is to announce a review of laws governing company pension schemes. | Pensions minister Rosie Winterton is to announce a review of laws governing company pension schemes. |
| Currently, many companies have to put more cash into a pension scheme when the business is taken over or restructured - but many firms have asked the government to relax the rule. | Currently, many companies have to put more cash into a pension scheme when the business is taken over or restructured - but many firms have asked the government to relax the rule. |
| With falling stocks affecting pension fund values, firms taking over others often have a big deficit to make up. | With falling stocks affecting pension fund values, firms taking over others often have a big deficit to make up. |
| The government says any changes would not weaken protection for pensions. | The government says any changes would not weaken protection for pensions. |
| Deficits | Deficits |
| The current laws were introduced in 2004, after thousands of pension scheme members lost their retirement funds when their employers ran into difficulty. | The current laws were introduced in 2004, after thousands of pension scheme members lost their retirement funds when their employers ran into difficulty. |
| Pension scheme deficits must now be cleared if a company is taken over or restructured. | Pension scheme deficits must now be cleared if a company is taken over or restructured. |
| Tough financial conditions mean more and more firms need to restructure to survive, but business groups complain this can be difficult with more and more pension schemes suffering deficits that must be cleared. | Tough financial conditions mean more and more firms need to restructure to survive, but business groups complain this can be difficult with more and more pension schemes suffering deficits that must be cleared. |
| The laws also make takeovers more expensive, say business groups. | The laws also make takeovers more expensive, say business groups. |
| BBC business reporter Dominic Laurie says: "Campaigners will worry any relaxation of the rules will allow companies to short-change their employees in retirement." | BBC business reporter Dominic Laurie says: "Campaigners will worry any relaxation of the rules will allow companies to short-change their employees in retirement." |
| TUC general secretary Brendan Barber said: "We welcome the commitment from ministers that this review will not harm pension scheme members, but we have yet to see any way that this can be reconciled with what business want. | TUC general secretary Brendan Barber said: "We welcome the commitment from ministers that this review will not harm pension scheme members, but we have yet to see any way that this can be reconciled with what business want. |
| "There seems to be a pretty clear choice here. Either companies meet their pension scheme liabilities or they don't. We doubt that any review can overcome this fundamental point." | "There seems to be a pretty clear choice here. Either companies meet their pension scheme liabilities or they don't. We doubt that any review can overcome this fundamental point." |
| Careful | |
| The current laws mean that any employer which leaves a multi-employer pension arrangement has to pay its full share of any deficit that may exist at that point. | |
| A leading firm of actuaries, Watson Wyatt, said the intention of the government's consultation needed careful interpretation. | |
| "The changes being discussed affect multi-employer schemes," it said. | |
| "These are schemes where a number of employers (including employers in the same group of companies) all have members in the same pension scheme. | |
| "Any easing of existing rules would only apply where a restructuring did not weaken the "covenant" of the employers standing behind the pension scheme," it explained. |