Pension funds still at risk from 'Maxwell' raids
The government has been accused of continuing to allow employers to do a'Maxwell' by retaining access to employee pension funds.
Link: The Maxwell report
The attack came from Tory shadow pensions minister George Osborne during debates on pensions provisions in the Finance Bill, referring to the notorious business tycoon Robert Maxwell who raided pension funds to keep his companies afloat and boost the share price.
Osborne said members were at risk if schemes lent 50% of assets to an employer because if meant the employer was unable to secure finance on commercial terms elsewhere.
Such schemes are probably ‘not in good shape’ Osborne warned.
He added: ‘Is it sensible to have provisions that encourage employers in such difficult circumstances to consider a raid on their pension funds?
‘Is that not exactly what happened with the former Labour MP Robert Maxwell? How does that interact with the pension protection measures in the Pensions Bill?’
He said the provisions should be limited to small, self-administered schemes where all the members agree.
And shadow Tory chief secretary Howard Flight said it was not just the idea of a repeat of the Maxwell situation that worried him.
If a firm went down, the value of its premises would be likely to suffer and end up worth less than the pension funds secured against them, he said.
But financial secretary Ruth Kelly said the Treasury had received very strong representations from small employers against losing the facility to borrow from schemes, which they have under existing tax rules.
She said the new rules would allow borrowing by sponsoring employers but only up to 50% and on commercial terms, subject to adequate security and safeguards.