Plans were made in April to hand the regulator wide-ranging powers to compel an employer “or associated organisations“ to make contributions into a scheme if it judged members benefits to be at risk.
The government, backed by trade unions, took the move after a surge in interest in uninsured buyout deals, but critics argued they would also deter private equity business and detrimentally impact on corporate restructurings.
But in response to sustained pressure from the Conservatives and business, the government has narrowed the focus of the powers, and has ditched plans to introduce them with secondary legislation.
Under the amended proposals, which will be incorporated into the pensions bill, the regulator will be required to publish a code of practice in an attempt to clarify its powers.
Companies will be able to use the code to gauge whether business activity has a materially detrimental impact on a pension scheme.
Baroness Noakes, shadow minister for the Treasury, said: They have done a U-turn on the issue. I have seen the amendment in draft and they have moved a long way.
But she warned that some parties in the private equity world were unhappy about the powers and the Conservatives may make further challenges once the full details were known.
We will certainly put some amendments down to make the government explain at the dispatch box what they mean.
A spokesman at the Department for Work and Pensions said the government had worked with interested parties over the summer to draft the new proposals.
It will now be much clearer when these powers will be used. We have taken a lot of views on board to ensure there is no impact on business activity.
Neil Carberry, head of pensions and employment policy at the Confederation of British Industry (CBI), said the new powers would correctly balance the needs of business with the needs to regulate parts of the buyout market.
The powers are due to be debated on October 27 in the House of Lords.
Tom Willetts
