Pensions Regulator warns companies 'prioritise pensions over dividends'

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Pensions Regulator warns companies 'prioritise pensions over dividends'

Wed 18th Feb 2009

The Pensions Regulator has issued a statement warning companies not to sacrifice their pension scheme recovery plans for the sake of continuing to pay dividends to shareholders.

In the statement, the government body said that it recognised that current economic conditions are putting a strain on employer's finances as asset values fall and budget deficit's rise.

David Norgrove, chairman of the Pensions Regulator, added: "There is no reason why a pension scheme deficit should push an otherwise viable employer into insolvency."

However, he continued: "The pension scheme recovery plan should not suffer, for example, in order to enable companies to continue paying dividends to shareholders."

The Pensions Regulator recommended that companies facing bankruptcy because of their pension scheme recovery plans should discuss their problems with the regulatory body, which will attempt to be flexible.

Established in 2004, the Pensions Regulator is the non-departmental government body which keeps an eye on work-based pension schemes.

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