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Regulator concerned over investors exploiting pensions loophole

Regulatory concern is growing over private equity investors forcing companies into administration in order to shed pension liabilities, the Financial Times reports.

Both the Pensions Regulator and the Pension Protection Fund are said to be concerned that investors have discovered a way around “moral hazard” provisions in law designed to prevent corporate restructuring which allow firms to offload pension liabilities from other wise profitable businesses.

This is possible because, as a senior creditor, the investor is able to extract concessions from unsecured creditors – including the pension scheme.

The FT says the regulator is looking specifically at whether it can use existing powers to force private equity firm HIG Europe to pay more to the pension scheme of bed manufacturer Silentnight, which went into administration last week.

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  1. Shame the Conservatives/Lib Dems got in last year, another year or so of Labour and the IMF could have wound up the state scheme as well, can`t see the country ever being able to afford this in the future. Except for the MPs part of course!

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