Banking and Finance: On your guard
Much has been said about the consequences of the Pensions Act for individuals, but the main provisions of the Act impact directly upon large commercial transactions. Institutional investors must think about the pension obligations of the companies they are buying up, say Gwyneth Macaulay and Philip Sutton
On 6 April, 2005, some of the main provisions of the Pensions Act 2004 came into force, bringing the issue of pensions in commercial transactions to the fore. The Act created the Pensions Protection Fund (PPF) to compensate members of defined benefit pension schemes, that wind up with an insolvent employer that cannot afford to fund members’ benefits. In addition, it introduced the Pensions Regulator, the new pensions watchdog, whose objectives include protecting the PPF through the exercise of anti-avoidance powers conferred on it under the Act.
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