The government has hinted that new laws to protect pension funds from being pillaged Maxwell-style, or altered without the consent of members, will be in the Queen’s speech this November.
The government is under increasing pressure because of the growing numbers of final salary pensions schemes that are being scrapped, which many blame on the introduction of controversial accounting standard FRS17.
In 2001, UK accounting standard setters published the new rule on pensions accounting. A year later, they were forced to postpone it due to stiff opposition from UK plc.
Companies affected by pension problems include big names in British industry such as BT, British Airways and Rolls-Royce.
For the first time, the new rule has revealed the gaping holes in UK pension schemes.
FRS17 requires company pension schemes to show the current value of assets and liabilities, instead of smoothing them over a period of up to 20 years.
A spokesman for the National Association of Pension Funds said he would welcome a new law. ‘We think it’s a good thing in principle because it potentially offers greater security. We are, however, keen to see the detail, as there’s a fine line between protection and excessive cost burden on scheme providers,’ he said.
Chancellor Gordon Brown told the Labour party conference in Bournemouth on Monday that work and pensions secretary Andrew Smith will ‘legislate for a new statutory pension protection fund, so that in future every worker contributing to a pension will have their pension protected and be guaranteed their pension rights’.
This was interpreted as meaning there will be a bill on the issue in the Queen’s speech, which sets out the legislative programme for 2003/04.
UK companies won a reprieve on FRS17, but they may soon have to comply with a similar, but stricter, pensions rule when they adopt international accounting standards in 2005.
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