Paper Suggests Merging the UK Pensions Regulator and PPF

The UK government assigned Paul Thorton in January to the task of reviewing the bodies involved in regulating and protecting workplace pensions. The idea to merge the two bodies is included in a consultation paper published Wednesday, to which the pension industry has until March 31 to respond.

ThePensions Regulator oversees work-based pension schemes and the Pension Protection Fund acts as a safety net for workers’ pensions when a company goes under.

Thornton, in the paper, argues that bringing to two bodies together would only strengthen the close collaboration the two already have, and one body would have a clear responsibility for the tradeoffs involved when the regulator gives clearance to mergers and acquisitions, or other financial changes. He said that would increase the chances of a company surviving but also increase the risk that the pension scheme could end up with the Pension Protection Fund if the company fails.

However, he warned that bringing the two together could make it much more difficult for the UK to defend occupational schemes against a potential European Union solvency directive that could threaten their existence by imposing on them insurance-type solvency requirements, the FT reported.

Another suggestion is a merger – the most likely – between the bodies that provide advice and dispute resolution over pensions: the Pensions Ombudsman (who also covers the Pension Protection Fund), the Pensions Advisory Service, and the Financial Ombudsman Service, according to the FT. Another idea floated by the paper is a merger between the Pensions Regulator and the Financial Services Authority.

More information about the situation is on a government Web site  here .