Uncertainty over impact of extended TPR powers persists

There is continued uncertainty around the proposed powers for The Pensions Regulator (TPR) outlined in the Pension Schemes Bill, with specific concerns as to what they will mean for deals to save distressed businesses, according to research from Taylor Wessing.

The firm's fifth annual Pensions in Restructuring Survey found that 57 per cent of respondents think that the impact will depend on how TPR uses the powers in practice, whilst 39 per cent agree or strongly agree that the powers could hamper deals to save distressed companies.

The report explained that participants had shown concerns that the powers could dissuade purchasers from entering into deals that would otherwise have rescued businesses.

In addition to this, they questioned whether TPR will have the resources to respond in a timely and effective manner to ensure that deals to save distressed businesses are not hampered, as a result of the expected "significant rise" in information that those involved with defined benefit schemes will provide to TPR.

Looking ahead however, the firm found that just 14 per cent of respondents viewed the approach of TPR as the most significant factor in determining how pension schemes of distressed employers will fare in the year ahead.

This compared to 43 per cent who viewed government and parliamentary activity as the most significant factor, whilst Covid-19 and Brexit were identified by 29 per cent and 14 per cent of respondents, respectively.

Although the firm also clarified that at the time of the survey, expectations for a vaccine were high, and news about the new strain of the virus had not been released.

Amid these concerns around distressed businesses, the survey also found that 50 per cent of respondents thought that the UK restructuring and insolvency regime has become too debtor-friendly at the expense of creditors such as pension schemes.

Taylor Wessing warned that if this proves true, there could be a “few years of surprising outcomes” from restructurings and insolvencies, as stakeholders, courts and legislators try to navigate the regime “in search of a new equilibrium".

It also predicted "many more" court challenges and appeals to higher courts, as parties look to assert their rights as they had always recognised them, to see whether, under the new regime, they have the same impact and carry the same value as before.

A spokesperson for TPR, said: “The Pension Schemes Bill contains new powers to further protect pension savers and we support the overall package of measures the Department of Work and Pensions has developed.

“We will work closely with all stakeholders, including through consultation, to produce the codes of practice and guidance to help inform and guide industry to ensure these measures are introduced in the most effective way.”

    Share Story:

Recent Stories

Are current roads into retirement delivering member value?
Laura Blows explores HSBC Master Trust’s recent report, Converting pension pots into incomes, with HSBC Retirement Services CEO, Alison Hatcher.

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

Pension portfolios – the role of asset-backed securities
Laura Blows is joined by Royal London Asset Management (RLAM) head of sterling credit research, Martin Foden, and its Senior Fund Manager, Shalin Shah to discuss the role of asset-backed securities (ABS) within pension fund portfolios
Incorporating ESG into fixed income
Laura Blows is joined by TCW head of fixed income ESG, Jamie Franco, to discuss incorporating environmental, social and governance (ESG) strategies into fixed income portfolios