‘Contribution notices’ to ensure pensions are paid in full

A
last-minute clause has been added to the Pension Bill to compel employers to
make up any shortfall in their final salary pension scheme.

Companies
deemed to have failed to act to close a pensions shortfall could be issued with
‘contribution notices’. The idea is deter firms from letting their schemes fall
into the red prior to the setting up of a Pension Protection Fund in 2005.

Once
the Bill becomes law, the new pensions regulator will investigate if firms have
neglected their schemes since the Government announced it would be introducing
the fund last June.

The
fund will act as a guarantee to ensure that retired scheme members will receive
100 per cent of their pension, while members still of working age will get at
least 90 per cent.

The
Pension Bill had its third reading on Tuesday and is now expected to pass into
law.

By Mike Berry