Zarah ChoudharyUnite, the union, has urged the government to act with extreme caution following its recently announced plans to allow companies to invest surpluses from defined benefit contribution pension schemes.
Unite, believes that any surplus belongs to the workers who contribute to the scheme and they must be given an equal say in how and where any surplus is invested.
If money is reinvested then the members of the scheme and not just employers must benefit from that investment.
Strict laws must be put in place to guarantee that any investment of surpluses is for prudent investment purposes only.
Unite also said that the government needs to reform the rules on defined benefit schemes to allow trustees to invest in the long-term, which would help to ensure defined benefit schemes remain open.
The current regime requires trustees to invest in a more conservative short-term manner.
Sharon Graham, general secretary at Unite said: “These proposals may have some benefits, but it is essential that nothing is done which allows employers to play fast and loose with workers’ pensions. The Maxwell scandal must never be repeated.
“Any decision on investing surplus pension funds needs to be made with representatives of the workers who pay into the funds.
“And it is essential that workers benefit from those investment decisions. We can’t have any loopholes which allow employers to squirrel away profits for themselves.
“It is also important to say that the most important challenge for the government in this area is not changing the rules on the investment of surpluses.
“Defined benefit pensions are by far the best way to ensure that workers enjoy a financially secure retirement.
“So, the big question is how to get employers to stop closing these schemes and start opening new ones.”
Unite believes the government should also be encouraging employers to be opening/re-opening defined benefit schemes and introducing policies and regulations to ensure that this happens.
