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BVCA calls on UK government to ditch pension reforms

The British Venture Capital Association is to call on the UK government to ditch proposed amendments to the Pensions Bill because they could be disastrous for the private equity industry. The BVCA fears that private equity investing in the UK will be adversely affected by prospective rules, which would see them having to plug pension holes in the companies they acquired.

John Mackie, the BVCA chief executive, dispatched a letter to the government yesterday in which he said that 'the changes could have a disastrous effect on our members' ability to raise capital for investment, particularly from the US.'

'Given that the government is committed to the private equity industry, I don't think that it can understand the implications of the Bill,' Edmund Truell of Duke Street Capital told the Times. 'It completely undermines the principle of limited liability upon which institutions invest in private equity funds.'

Under the new rules, a pension regulator, due to be launched next January, can recoup money from a company's directors and shareholders if it believes they purposely deprived the pension fund of money. This means that a private equity firm may potentially find itself losing significant amounts of capital bailing out an under-funded pension scheme. It also means that limited partners are likely to become increasingly wary of investing in UK private equity funds.

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