> and they should not be allowed to pull from the pension fund, they have to pull from their own money.
What's the pension's own money here? Everything they manage should nominally be part of the fund owed to their retirees. Where do you propose they actually draw money from?
Their management fees. They aren't running a charity, they collect from the $1000 pension fund a 1-2% management fee (if similar to US 401k administrators).
And if they don't have enough cash to add back into the fund, they need to take on debt to fund THEIR shortfall.
The businesses were not told to increase their funding obligation from the start, so they should be off the hook.
You are right, in a way. If they can't service the debts themselves, and they can't take out a loan to cover it, they have to go bankrupt.
In reality, the pension provider probably should declare bankrupcy. In theory, FSCS / PPF should kick in and most people should still get some kind of pension out of it - albeit a lot less than they expected.
However... I don't know much about the bankrupcy procedure. Would administrators have to be called in? Would they then chase these customers anyway?
I don't see any way out of this cock-up of a law without the law itself being changed. It's bonkers.
[UPDATE]
Actually, it turns out that's almost exactly what they've done
... and they aren't willing to do anything about it, for fear that people might use any fallout mitigation to walk away from being responsible employers.
Look at the PBGC in the US and the rampant abuse (socialization of the cost of "mild" white collar crime - shortfalls that hit well after the fact due to purposefully but mildly underestimating future liability and overestimating future returns) for the other side to the outcome described in the article. Financial regulations are hard. It is like infosec, where you have well funded adversaries who are sometimes criminals.
The description makes it sound like they're not /actually/ underfunded just underfunded assuming they have to pay for someone else to take over fund and wrap up their fund right?
The pension are presumably insured to cover their negligence and liabilities...including failure to properly notice employers/members of the fund in breach of their duty to do so, which resulted in damages. Otherwise it comes directly from the pension (which isn't just a fund made up of employer contributions, it is a business entity that takes fees from the fund itself)
What's the pension's own money here? Everything they manage should nominally be part of the fund owed to their retirees. Where do you propose they actually draw money from?