The Pensions Regulator must strike a careful balance between the need to protect benefits and the ability of companies to afford investment for growth, the ABI has warned. 

Responding to the consultation on how the Regulator will approach the funding of defined benefit schemes, Peter Montagnon, ABI Director of Investment Affairs, said:

“The bubble in the gilts market shows there is a real danger of overkill with money being poured into investments that represent outstandingly poor value at current prices.  It suggests some funds have lost sight of the need for value in their determination to reduce risk.

“The Regulator must avoid encouraging this, or the cost to companies of meeting pension obligations will rise, imposing a heavy burden on companies, investment and jobs.

“We also urge the Regulator to remember the importance of a consistent and transparent approach.  Shareholders need access to information about the implications of the funding position of pension schemes run by companies in which they invest.  They also need to know at what point the Regulator will step in.  Without this, market confidence will erode and the cost of capital to companies will rise.”

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Notes

1.            Enquiries to:       

Lucy Butler              020 7216 7411 (Mobile: 07712 841 184)

         Alan Leaman    020 7216 7440 (Mobile: 07957 482 330)

         Jonathan French   020 7216 7392 (Mobile: 07958 330 480)

         Malcolm Tarling    020 7216 7410 (Mobile: 07776 147 667)

2.      Created under the Pensions Act 2004, The Pensions Regulator is the new regulator of work-based pension schemes in the UK.

3.      The ABI’s response to the Pensions Regulator’s consultation document on “How the Pensions Regulator will Regulate the Funding of Defined Benefits”, is available via the ABI press office. 

4.      The ABI is the trade association for Britain’s insurance industry. Its nearly 400 member companies provide over 94% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold up to a sixth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

5.         An ISDN line is available for broadcasts.

07/06