The Department for Work and Pensions has reaffirmed the change in the law that new regulations will protect employees against their pension scheme being scrapped if the company is bought out.
Occasionally, employees of companies that were taken over would find that their new employers would cease pension contributions. This would not be allowed to happen within the proposed regulations.
Depending on the response to the consultation concerning this proposal, the government will be looking to set down the regulations and implement it in April 2005.
Our view
This is obviously a sensible a welcome move although it may prohibit some mergers and acquisitions given that a buyer may not want to take on difficult company pension liabilities. Alternatively, the business will sell for less.