Defined Benefit  

Regulator fires warning shot at DB schemes

"There have been too many cases recently where firms seemed able to afford large dividends and then went out of business leaving the pension scheme starved of cash."

Fiona Tait, technical director at Intelligent Pensions, said following the high profile failures of schemes such as BHS and Carillion she often has to reassure members of defined benefits schemes who are concerned about the solvency of their schemes.

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Ms Tait said: "These guidelines offer a bit more comfort that trustees have the scheme's long term solvency in mind and members are more likely to receive their promised benefits, even if this is some time off.

"The fact that one of The Pension Regulator's goal is to reduce dependency on the employer is also very helpful since it is not always easy for employees or their advisers to assess the strength of the employer covenant."

emma.hughes@ft.com