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Posted On: May. 18, 1997 12:00 AM CST

HARROGATE, England-U.K. employers are being unfairly criticized for recouping surplus assets from occupational pension plans, contends the chairman of an association of pension managers.

"We should be celebrating the surpluses of pension funds" instead of referring to the issue as a problem, said Tom Ross, who as outgoing chairman gave the keynote address at the National Assn. of Pension Funds' annual conference in Harrogate this month.

It has become a problem, he said, as employers and plan participants fight over who is entitled to the surplus funds.

"One or two fundamentals should be remembered when there's a lack of clarity," said Mr. Ross. "Where employers pay the costs of deficiencies, it is not unreasonable they should get the benefit of success."

He added that plan administrators and trustees of defined benefit pension plans should review their plan documents to iron out any areas of uncertainty and lack of clarity over control of surplus assets.

Within the United Kingdom, there is a "strong, vibrant occupational pensions sector which works," said Mr. Ross. And the newly elected Labour government would do well not to "undermine that which has worked well for many years," he warned.

As the new government led by Tony Blair looks to the future, "it is very important that we remind them of the strengths and successes of occupational pensions," and show that "we in occupational pensions are people to be trusted. . .listened to. . .with strong and sound views on the way pension reform goes forward," said Mr. Ross.

Senior members of the government with responsibility for pensions are already familiar with the NAPF, said Ann Robinson, the NAPF's director general, who also addressed the meeting.

"We worked closely with them when they were in opposition," Ms. Robinson explained.

As a result, some of the new government's proposals for pensions show the effects of the NAPF's lobbying, she added.

"They have stated they have a commitment to funded pensions and support for occupational pensions," said Ms. Robinson.

The NAPF will continue to lobby the government, in particular to provide incentives for more employers to provide occupational pensions.

"Funded pensions either directly provided or facilitated by employers are the most secure and safest form of saving for retirement income," said Ms. Robinson.

But she warned that pension regulation must not become so onerous it deters employers from providing pension plans.

U.K. pension advisers also have argued that new regulations designed to protect occupational pension plans are so onerous that they will deter the formation of new plans (BI, April 14).

"Occupational pensions have been 'strengthened' almost to death as a result of the 1995 Pensions Act," Ms. Robinson observed. "What we need now is a government which will support occupational pensions rather than subject them to slow strangulation."

Incoming NAPF Chairman Peter Murray identified the European Monetary Union and its proposed adoption of a single European currency as the most important event on the horizon for occupational pensions (see related story).

U.K. pension plans will be affected whether the United Kingdom joins the EMU or not, he said, adding that joining EMU looks more likely for Britain with a Labour government.

The NAPF's research committee is looking at the issue and, since the beginning of last year, the association has been advising the Bank of England on pension issues arising from the proposed single European currency.

"Almost certainly the chosen sterling conversion rate will be the key aspect of the single currency for pension funds both in terms of investment returns and in terms of liabilities and will also be an important factor for individual pensioners," said Mr. Murray.

As the new chairman of NAPF, Mr. Murray said he wants to see more employers provide pensions in the United Kingdom.

More than half the working population will have inadequate retirement income, at a time when state benefits are falling and the population is aging, Mr. Murray said.

"This is a timebomb waiting to go off," he warned.

Employers have been increasingly penalized for running occupational plans, particularly though the onerous provisions of the Pensions Act 1995, according to Mr. Murray.

"I think the employer has been the forgotten man in the pensions development that we have had over the last 20 years," Mr. Murray said.

One of NAPF's tasks under Mr. Murray's leadership will be to take a look at regulation and identify areas that turn employers away from offering occupational pension plans. The association's own viewpoint will change from "is this or that in the member's interest" to "what would employers think of that," he said