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New powers in UK pension watchdog hit dealmaking

New powers that allow a UK pensioner to stay in jail if business activities disrupt the retirement plan have begun to undermine contracts, according to pension advisers.

At least one agreement has reached a climax since the new lawsuit was filed in October, according to a Financial Times survey of six of the largest pension advisors offering advice on mergers and acquisitions.

Consumers are once again worried about profit-making companies (DBs), while employers are at risk of losing pension funds.

“I know of one of the best deals – related to the DB system – that has collapsed,” said John Harvey, a colleague of Aon, a consulting firm. “Negotiations progressed. Pension concerns greatly influenced the decision to leave the union. “

These findings provide the first dynamic information on The New Pensions Regulator designed to provide better protection for pensioners. The superintendent may seek criminal penalties, including imprisonment and unlimited fines, for anyone who engages in activities that waste DB pension.

The sanctions came after a series of corporate pension cases, including that of BHS, a former high street vendor, and Carillion, a group of expatriates, while the retirement benefits of thousands of members were put at risk for lower incomes. the process when the business collapsed.

Stephen Postill, executive director of Willis Towers Watson, said the new rules appear to have a greater impact on the private sector, which is often heavily supported.

“Of course there are fears related to trade,” Postill said. “It’s early days but I hope the new rules will make it harder for a business to sell if they have a large pension,” he said, adding: “I would say this power is a barrier to business.”

Charles Cowling, a senior researcher with Mercer, said the new powers were delaying business due to the “additional negotiations and legal advice” needed now.

“The new high bar has created a lot of fears that trustees and employers are showing the potential for these new powers to bring fines and prosecutions,” Cowling said. “It is slowing down the process because co-workers have to be very careful to monitor [pension scheme] the trustees are notified of any corporate activity that may affect the strength of the contract. ”

XPS Pensions reported that some companies that want to buy now “do not want to approach” a business with a DB pension, due to future risk. “I think we will definitely see more companies come out of contracts, or non-contracts, that are affected,” said Robert Wallace, a company consultant at XPS. “While the risk of incarceration may be minimal, it is not something that some consumers are willing to part with.”

The Pensions Regulator states: “We do not want to criticize the behavior that we consider to be a commercial venture. However, if someone wants to do something that could be a very dangerous example of intentional or reckless behavior that could put members’ money at risk, we will not hesitate to use the power we have to protect members and the Pension Protection Fund.

The British Private Equity & Venture Capital Association says its members are proud of their “pension obligations” and their actions show that “all are expected to work for the benefit of the companies they support”.

Additional reports by Kaye Wiggins

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