The UK's pensions regulator has warned pension scheme trustees that it will be monitoring funds that are at risk and may step in if necessary to protect the benefits of workers.
The news comes in a strategy report from the pensions watchdog which wants to ease the burden on the Pension Protection Fund, set up to administer funds left in deficit by bankrupt companies. Up to 300 occupational pension schemes are at risk of collapsing, the report said.
The regulator also voiced its concerns over the management of smaller schemes, typically those with under 1000 members. Trustees of these schemes often lack the basic investment knowledge needed and the extra administrative burden on defined contribution schemes, which are becoming more popular as defined benefit schemes are phased out, also increases the margin for error.
The watchdog said that the priorities for the next few years would be to ensure that employers funded their schemes more fully and that employees understood the risks of defined-contribution schemes, which are becoming more popular as defined benefit schemes are replaced.
Company pension schemes are under pressure as many are in deficit and attempting to make changes to employees’ benefits. Several unions have threatened strike action in the face of increases to retirement ages and reduced entitlements.