Pensions Act 1995
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| Long title | ... |
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| Citation | 1995 c 26 |
| Territorial extent | England and Wales; Scotland; Northern Ireland |
| Dates | |
| Royal assent | 1995 |
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Status: Unknown
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| Text of statute as originally enacted | |
The Pensions Act 1995 (c 26) is a piece of United Kingdom legislation to improve the running of pension schemes.
Following the death of Robert Maxwell, it became clear that he had embezzled a large amount of money from the pension fund of Mirror Group Newspapers. As a result of this, a review was established to look into ways that the running of pension schemes could be improved. The end result was the Pensions Act 1995.
The main features of the Act included:
Many of the features introduced by the Act were abolished or amended by the Pensions Act 2004. The MFR was heavily criticised in the Myners Report (2001),which was a HM Treasury sponsored report into institutional investment in the UK. The Myners Report identified three problems with the MFR:
The Pensions Act 2004 replaced the MFR from September 2005 with a new scheme-specific "statutory funding objective" (SFO), allowing more flexiblity to individual schemes' circumstances whilst at the same time protecting members' benefits. The Act established the Pension Regulator with the power to require sponsoring companies to fully fund their pension liabilities, by adopting an appropriate recovery strategy consistent with the SFO. Liu and Tonks (2012) examine the effect of a company's pension commitments on its dividend and investment policies, assessing the impact of funding rules under the MFR, and also under the funding requirements introduced under the Pensions Act 2004. They find a strong negative relationship between a firm's dividend payments and its pension contributions, but a weaker effect on investments. They found that dividend and investment sensitivities to pension contributions were more pronounced after the introduction of the Pensions Act 2004.
The Act also affects State Pensions[1]. A significant change was the phasing in of equalisation of state pension ages for men and women over a ten-year period. Previously men had been discriminated against because women became eligible for the state pension at 60 while men had to wait until 65, but this was ruled illegal by the ECHR.
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