US firms may escape pensions clawback

THE new Government pensions regulator may not have sufficient powers to pursue foreign parent companies which fail to adequately support their troubled UK pension funds.

The regulator's chairman David Norgrove admitted that he was unsure how far abroad his jurisdiction stretched. 'Clearly it's a concern', he said.

His comments raised doubts that the beefed-up watchdog would not be able to seek redress from the vast number of US companies that have thousands of employees in Britain - such as Federal Mogul, now in Chapter 11 creditor protection.

The company owns engineer Turner & Newall whose pensioners may be among the first to receive payments from the Government's Pensions Protection Fund. Bust retailers Allders and Courts UK may also be near the head of the queue.

The fund - to be introduced on 6 April - is designed to provide security for workers saving into final-salary schemes if their employer goes out of business or winds up the fund. But the PPF's new boss insists that it will not encourage companies to call in administrators as soon as they can pass on their liabilities.

'I don't envisage that our scheme will be putting companies under,' said Lawrence Churchill. Companies with well-run schemes will effectively bail out failing firms until a levy based on each fund's health is introduced next year.

Some £150m will be collected this year, followed by £300m next.