Suspended UK pension contributions could total £1bn
Up to £1bn in pension contributions could be suspended this year as businesses strike deals with retirement scheme trustees to keep afloat during the Covid-19 crisis.
The estimate emerged from a Financial Times survey of professional services companies advising more than half of the 5,500 employers backing “defined benefit” pension schemes in the UK.
A lockdown of the nation’s non-essential businesses and households has left many companies facing steep reductions in revenues and a subsequent cash crisis, resulting in interventions by the government and regulators.
Virgin Atlantic, the airline owned by Richard Branson, and the Financial Times are among the employers recently announcing temporary cuts to staff pension payments, in response to Covid-19 pressures.
Emergency measures introduced by the Pensions Regulator last month gave employers breathing space to suspend, or reduce, scheduled payments to repair funding holes in DB schemes they back. In return, they must suspend dividend payments for the duration of the payment holiday.
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