The recession must not be used as an excuse to cut back on pensions, the pensions watchdog has warned.
The UK Pensions Regulator yesterday told organisations to avoid using the economic downturn to slash pension contributions while still paying dividends to shareholders. The watchdog admitted the financial turmoil was of “real concern” to employers with final salary schemes, but urged that all trustees must be treated fairly.
The news comes as reward strategies are undergoing a radical revamp as employers battle to retain talented workers while cutting costs during the recession.
Total company pension deficits are estimated to be £191bn, almost four times the £49bn deficit recorded a year ago.
TUC assistant general secretary Kay Carberry backed the regulator’s call to avoid cutting pensions. She said: “We stand vigilant against any company using the recession as an excuse to cut back on pensions.
“This is a helpful reminder that pensions are for the long term, and that the recession is no reason for short-term panic. We welcome the regulator’s reiteration that it will look seriously at any scheme with short-term difficulties – and that it already has the flexibility to do this.”
Last month, Robin Simmons, partner at pensions specialist law firm Sackers, told Personnel Today that employers wishing to change or reduce pensions schemes must consult with all staff involved to avoid any legal pitfalls.
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