The Pensions Regulator’s power to issue a financial support direction (FSD) could mean that a bank, lender or other corporate investor becomes obliged to provide financial support to a pension scheme to which it has little, if any, connection. External business activities with third parties could result in the lender being 'connected' or 'associated' with a third party employer that participates in a defined benefit pension scheme.
If such a connection is established, the lender could become a potential target of an FSD in relation to that third party's pension scheme. In the worst case scenario, failure to comply with an FSD which has been issued in relation to a specified defined benefit pension scheme could mean the target of the FSD becomes liable to pay the pension scheme deficit in full.
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