Newspaper article The Evening Standard (London, England)

Hundreds of Pension Funds 'Facing Collapse'

Newspaper article The Evening Standard (London, England)

Hundreds of Pension Funds 'Facing Collapse'

Article excerpt


HUNDREDS of company retirement schemes are at risk of collapse, the Pensions Regulator warned today.

In a coruscating attack on the incompetence of many pension fund trustees, the watchdog said that, after it had been inundated with reports of poor governance, up to 300 major occupational schemes are being monitored because of the danger of them going bust.

A report from Pensions Regulator David Norgrove one year on from it getting greater powers to intervene in the running of retirement funds, will heighten fears about the state of the pensions market, where workers are routinely having benefits cut back by companies or, in some cases, schemes are closed completely.

The poor state of many funds will see the regulator move to "active intervention" at between 150 and 300 of the biggest which are regarded as high risk. Its report states: "Our experience is that the standard of governance of many schemes, particularly smaller ones, is poor.

"Our research shows clear evidence of low standards of trustee knowledge and understanding, particularly at schemes with under 1000 members."

The report highlights a string of failures in the standards of trustees, including a lack of basic investment knowledge and the inability to understand professional advisers.

It says the amount of training and education of trustees to do their job is woeful, and many have clear conflicts of interest because they are employees or board members of the fund's sponsoring company. The regulator indicated lack of competence could mean intervention to force trustees to meet minimum capability levels.

The risk of a string of occupational schemes collapsing could put the new Pension Protection Fund under serious pressure. It was set up to safeguard the interests of workers and pensioners in the event of a scheme going bust.

But its ability to bail out schemes in the event of several collapses-will come under question and is behind moves to raise funding of [pounds sterling]575 million. …

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