Firms in Essex are being warned they could face heavy debts which might threaten their solvency under new laws affecting pensions.

Essex accountants Baker Tilly says legislation introduced earlier this year could exacerbate the pensions crisis.

Mandy Smart, the firm's recovery partner in Chelmsford, said: "The new clauses will make many large businesses and groups of companies in the region as fragile as a house of cards."

She explained: "In the past, any employers intending to close their defined benefit scheme were required to secure all members' benefits in full with an insurance company. Or, they could reach an arrangement with the trustees if they could not afford to settle any deficit in the scheme in full. Insolvency was the last option."

But she claims that now any company or individual could be obliged to help plug the gap in the pension fund.

She said: "This means any previously unaffected companies and whole groups could be brought into financial difficulties rather than just individual subsidiaries."

Published Wednesday June 30, 2004

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