Putting workers before investors makes DB schemes affordable
Companies would be able to afford defined benefit schemes if their bosses were forced to pay into them before they pay out to shareholders, new research showed.
According to a study from Sun Yat-sen University, Exeter University and Lancaster University Management School – which examined around 1,655 companies from 2003 to 2011 – incentivising executives to fund their pension schemes was more likely to see the schemes survive than threatening bosses with prison sentences.
Amber Rudd, secretary for work and pensions, announced earlier this month (February 11) that “wilful or reckless behaviour” relating to a pension scheme will become a criminal offence, to avoid future “Philip Green-style pension scandals”.
The new sanctions include a prison sentence of up to seven years for company bosses and unlimited fines to be charged by the courts.
Meng He, research assistant professor at Sun Yat-sen University, Paraskevi Vicky Kiosse, associate professor of accounting at Exeter University Business School and Steven Young, professor of accounting at Lancaster University Management School concluded that from the 1,655 companies, 277 made share buybacks and other windfall payouts.
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