Crunch time for DB schemes under new Directive warns ABN Amro

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Dutch bank ABN Amro says most UK finance directors are unaware of potential funding shocks affecting defined benefit pension schemes stemming from the pending EU Pension Funds Directive, which comes into effect on 23 September, 2005.

Compounding the problem is the tardiness of the UK government, which is yet to clarify two crucial technical points relating to the legislation as it is introduced into this country, the bank says. Among key requirements of the Directive are that “sufficient and appropriate assets” are used to cover “technical provisions” – meaning setting aside enough money to provide for scheme benefit payments – as well as ensuring deficits are removed within a “limited” period. "With only 365 days to go, UK companies are still waiting to see the detail on two of the key requirements – the prescr...

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