AN INCREASING number of insolvent companies on both sides of the Atlantic are threatening to overburden government safety nets indended to provide for employees who have lost some or all of their retirement savings.
Today's FT reports the US Pension Benefit Guaranty Corporation - the US government-sponsored insurance scheme - is concerned it may have to dig even deeper into its pockets after United Airlines announced last week it would cease making contributions to its underfunded pension scheme while under bankruptcy protection.
If United Airlines' pension scheme defaults, it would be the largest by a US employer and would widen the Guarantee Corporation's deficit by 50%.
In the UK, similar scenarios are expected. British government officials are currently in talks with trustees to car part makers T&N's pension scheme, which faces a shortfall of £875m if wound up.
Members of the T&N scheme will not, however, receive any funding from the pending Pension Protection Fund, launching next April, as the company's US parent filed for bankruptcy protection in 2001.
IN THE meantime, Prudential has slammed proposals set out by the Accountancy Standards Board to change the way life insurers present accounts to policyholders and shareholders, deeming the changes as "pointless", reports the Daily Telegraph.
Pru's finance director Philip Broadley said he could not "see the point" of the change, and added, if implemented, it would only confuse shareholders and would not be seen by policyholders.
The Telegraph quoted Pru chief executive Jonathan Bloomer as saying: "We have also got the international accountancy standard changes coming through in 2005, so there will be two sets of changes. Shareholders are not going to welcome that because they will not be able to compare our accounts year by year. The whole thing is being rushed through at a ridiculous pace."
DESPITE BEING AMONGST the best-paid members of society, the Guardian says company executives are resigning "in droves" because salaries not rising fast enough and bonuses have been cut.
According to a survey by the Chartered Management Institute, around 5% of managers decided to leave their posts last year in search for a better pay-deal, compared to 4% in 2002.
Chief executives were the ones most likely to hand in their notice, with 12.9% resigning last year compared with 4.8% in 2002.IFAonline
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