Watchdog rules pensions come before dividends

Pensioners in a file photo.

LONDON (Reuters) - The country's Pensions Regulator will say on Wednesday that companies will not be able to cut contributions to underfunded pension schemes so long as they are still paying dividends, the Financial Times reported.

The regulator will also signal, however, that it is prepared to stretch out repayment periods for companies to restore pension schemes.

"There is no reason why a pension scheme deficit should push an otherwise viable employer into insolvency," the FT quoted the regulator as saying. "But the pension recovery plan should not suffer, for example, in order to enable companies to continue paying dividends to shareholders."

The newspaper said that in broad terms companies with underfunded schemes would be able to take up to 10 years to complete a recovery plan, while some would get longer but will attract special scrutiny.

(Reporting by Paul Hoskins)