An alarming rise in the number of late payments into company pension schemes could indicate economic turbulence ahead, according to law firm Pinsent Masons.
Its research shows the number of late payments being flagged up with the Pensions Regulator rose by 35% last year, growing from 6787 in 2011 to 9172 in 2012.
The figures also show the number of late payment notifications is higher than at any time in the past five years, including during the credit crisis.
Under UK pensions rules, scheme trustees are required to inform the regulator when contributions from employers are received late, particularly if contributions remain unpaid after 90 days.
The rise could signal an impending wave of restructuring and insolvencies, said Jamie White, partner and head of restructuring at Pinsent Masons.
"Time and again we have seen in insolvency proceedings that when companies are in distress, pension payments are deferred or not paid at all in an attempt to free up cash," he said:
"This can buy time but creates – or adds to – a deficit while the business tries to trade its way out of trouble.
"The latest increase does raise real concerns."
He admitted some of the increase was due to increased vigilance by the regulator, and by the insurance companies that administer the schemes.
But this did not alone explain the trend, especially as firms must only notify if late payments are of "material significance", he said.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article