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Fears that NEDs could quit a sinking pension

The Allders’ administration raises a thorny issue about who is legally responsible for Allders’ final-salary pension scheme affecting 3,200 scheme members.

The legal situation seems to arise because former Allders owner Minerva still retains a 60 per cent holding in Scarlett Retail, the company that took Allders private.

New legislation to protect company pensioners was supposed to help. The pensions protection fund, which comes into being in April, allows up to six years to determine who (including former owners) is liable for the company’s final-salary pension scheme deficit. This is a long period of uncertainty for all directors concerned.

My worry is that this new pension legislation could lead to the higher-calibre non-executive directors of quoted companies stepping down from boards if they think trouble is brewing on the pension front.

As NEDs are on boards to protect shareholders and create added value, the best ones could quit their positions, leaving room for less scrup-ulous or inexperienced independent directors.

This is the key issue. It is the weakest companies or those with the biggest pension problems that require the services of the premium non-executive directors.

Urgent action must therefore be taken that balances the interests of management teams, shareholders and company pensioners.

Luke AhernDirector of broking,Corporate Synergy,London

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