Why are employees still required to pay into company pension schemes?
In the last few years there have been a slew of companies going into administration and immediately being snapped up by buyers. This method of obtaining an ailing business means that there is no obligation to support the pension scheme.
Mike Ashley of Sports Direct bought the struggling House of Fraser chain just hours after it went into administration. Giving all of the assets of the company with none of the pension obligations
Today we learn that Johnston Press have a similar arrangement to go into administration and then immediately have its assets bought by lenders. Whilst the intention would seem to be to keep the presses rolling, the removal of the defined pension scheme saves costs to the new buyers whilst leaving employees at a loss.
It’s all very well the Government saying that workplaces must have pension schemes to ensure that employees contribute to their retirement. What is not clear is what happens to these employees when the company brazenly pays dividends to shareholders whilst neglecting their pension obligations.
The Pension Protection Fund was set up to help employees who were at risk of losing their pensions due to the company they worked for going bust. It seems however in recent years that some companies are deliberately going into administration so that they can then carry on trading without the obligation of the pension scheme.
There will of course be those who say that this is a perfectly legal way to operate and that is of course true. However, it seems to now be normal business practice for shareholder dividends and director bonuses to take priority over any obligations to customers or employees.
Making employees pay into pension schemes that companies can routinely walk away from is wrong. Yet again hard working people are being made to pay for the excesses of those that ignore their obligations.
It’s time the UK Government started looking after the people they represent rather than the businesses that are exploiting them.