'Frank Field test' has biggest impact on pension scheme restructuring decisions

The 'Frank Field test' has the biggest impact on how key decisions in relation to pension funding, security and corporate restructuring are made by pension schemes, according to Taylor Wessing.

The Pensions in Restructuring Survey found that the majority of respondents (75 per cent) considered how their decisions would be judged in the event that the Frank Field and the Work and Pensions Committee were to investigate the scheme, as having the greatest impact on how pension matters are addressed in corporate restructurings.

The ‘clearer, quicker, tougher’ approach adopted by The Pensions Regulator (TPR) was listed as the biggest consideration for just 11 per cent of respondents, with the report noting that “there may be a sense that this new approach [from TPR] has been influenced in part by some of the criticisms it previously received from Mr Field and the committee.”

Challenges to CVAs by non-pensions unsecured creditors tied with TPRs approach at 11 per cent, while the expected new powers for TPR and the potential Pension Schemes Bill was chosen by just 3 per cent of those surveyed.

The full report from Taylor Wessing noted that this factor may have ranked lowly due to “a sense that practice has already moved to a position whereby the new powers and offences will not make any difference to behaviours”

The survey also revealed that over half of respondents (53 per cent) did not agree with proposals outlined in the Rookes Review that would allow TPR power to delay or stop a restructuring if they deemed the trustees of the scheme unprepared.

Looking ahead, more than half of respondents also disagreed with the suggestion that a more prescriptive regime from TPR on how DB schemes are funded would mean that DB pension obligations will not be a material cause of employer insolvencies, or a material issue to deal with following an insolvency, with just 21 per cent agreeing.

However, 46 per cent of those surveyed agreed that the government plans around communications and information sharing between employers and trustees, as outlined in its response to the consultation on TPR powers, was the action to take.

Furthermore, 75 per cent said that current levels of compensation provided by the Pension Protection Fund strike an appropriate balance between protecting members and the costs of providing compensation.

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