Pensions get better protection

The government has stepped in to boost protection for employees whose company pension schemes are involved in a buyout.

Pensions reform minister Mike O’Brien signaled last month that the Pensions Regulator will be given enhanced powers to compel companies who buy other companies and their pension schemes to put enough money in to protect members’ interests.

The move follows government concern over the trend for firms to buy out companies with reasonably well-funded salary schemes to obtain the pensions assets, then dispose of the original business and run the pension scheme for a profit.

O’Brien said: “I want to guard against pension schemes simply being treated as a commodity to be bought or sold.” However, he added that most schemes would not be affected and the new powers would only be targeted at “risky situations”.

Joint general secretary of the Unite general union Derek Simpson said the changes “are precisely the sort of protections Unite has been campaigning for. These measures will provide extra safeguards for occupational pension scheme members and their pension savings”. TUC general secretary Brendan Barber added that this will “help protect pension schemes against smash-and-grab raids”.

There will be an eight-week consultation process on the changes.