UK - The Pensions Protection Fund will only protect 70% of the total value of members' pension promise, a leading actuarial consultant claims.
Lane Clark & Peacock says the government’s claim that members will receive “100% compensation” on retirement is false.
Partner Francis Fernandes says compensation relates only to the current pension in payment at the date of insolvency and does not include all the future pension increases many pensioners might have been expecting from the scheme.
He said: “For those pensioners who retired before April 6, 1997, the PPF will not grant any increases to pensions in payment. This could mean the PPF protects only around 70-80% of the total pension promise.”
Fernandes added: “For many schemes, a major element of the existing promise would have been earned before April 1997. For some, particularly the larger ones, the pension promise would have included future pension increases, even though this was not a statutory requirement. Removing these increases from the PPF promise significantly reduces the protection.”
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