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Fund plans to bail out pensioners: but experts query depth of pool for liquidated schemes.

Document Cited in Related
Vincent
AuthorBerens, Camilla
PositionPensions - Pension Protection Fund

Government proposals to set up a pension pool for employees of companies that go into liquidation have received a cautious welcome. But experts are concerned that there are still holes in the plans. Announcing the new Pension Protection Fund (PPF), pensions secretary Andrew Smith said the new scheme would ensure that over 10 million members of final-salary pension schemes "will never again face the injustice of saving throughout their lives, only to have their hard-earned pension slashed just before they retire".

However, the Pensions Advisory Service (PAS) and the National Association of Pension Funds (NAPF) fear that the proposals do not address important issues. Terry Faulkner, chairman of the NAPE welcomed the move in principle, but added: "We are still waiting for clarification oil a range of issues. At the moment, it's a case of the devil being in the detail."

One key concern is how the pool, which will be funded by a levy on all private-sector final-salary schemes, would cope with a serious crisis. "Much will depend on the ability of the pension protection fund to deliver what it promises," said Malcolm McLean, chief executive of the PAS. "What will happen if a major company goes bust? Will the fund be able to cope and will the government step in if it can't...

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