Government gives in to business concerns over Pensions Bill

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The Independent Online

The government finally bowed to industry pressure over its Pensions Bill yesterday, announcing a series of amendments, including a move to reverse legislation that could have left individual directors and shareholders responsible for company pension fund deficits.

The government finally bowed to industry pressure over its Pensions Bill yesterday, announcing a series of amendments, including a move to reverse legislation that could have left individual directors and shareholders responsible for company pension fund deficits.

An industry consortium led by the National Association of Pension Funds and the British Venture Capital Association had lobbied for the changes throughout the summer, arguing that they could blight corporate activity if they were not changed.

One of the main areas of concern was a clause which could have enabled pension fund trustees to chase parent companies, or even former company owners, 10 or 20 years after the deficit had been incurred, even if it was not their fault. However, yesterday's amendments included a time limit, which will only allow the pensions regulator to look at cases where companies have failed to act on a case within the past six years.

Another major bone of contention was a clause which potentially left individual directors or shareholders liable for pension deficits. However, an amendment specifying that this was not the intention of the legislation has also been filed. One further amendment, to ensure that companies cannot dump their pension liabilities on the new pension protection fund - so-called "moral-hazard" clauses - was also filed.

Malcolm Wicks, the Minister of State for Pensions, said: "With the moral hazard clauses in the Bill we have sent a strong message to unscrupulous employers - they can't use company structures and business transactions as a cover for avoiding their pensions obligations and dumping their liabilities. As promised, we've consulted with the industry ... and have listened to their concerns.

"The amendments we have put forward to the Bill will provide the reassurance responsible businesses have asked for on the aims, objectives and practical application of the moral hazard clauses.... The amendments ensure the pension protection fund and the taxpayer don't pay for employers seeking to dodge their obligations."

One extra amendment was the introduction of a "clearance" system for companies which are undergoing restructuring and are looking for advice on their pension liabilities. In these cases, the Government said, the pensions regulator will be obliged to make decisions for the company. However, the amendment adds that the regulator will "not be bound by any clearance statement if there is a material change in circumstances, or if the circumstances described in the application are not real".

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