UK - Pension lawyers have attacked the government's £400m compensation package for scheme members who have lost savings when their firms collapsed as a "cost neutral" stunt.
Denton Wilde Sapte partner Elmer Doonan said the rescue package was “lamentably inadequate” and “probably a very good trick”.
He said: “The £400m will be distributed to the poorest pensioners – those who have lost everything and are likely to be receiving income support and housing benefit. But paying these people will lift them above the level at which they can obtain benefits – effectively making the system cost neutral to government.”
Doonan called for a rethink, claiming that the government was well aware of the social security aspect.
He said: “We already see this in pension funds with very low paid people opting not to be part of a scheme because it takes them out of social security and leaves them worse off than before. We need meaningful compensation for the full amount people have lost.”
Norton Rose partner Lesley Browning warned the rescue package could put trustees in a difficult situation if they were responsible for distributing the funds.
She said: “If trustees are liable, there will be concerns as to whether they have sufficient information on whether it is in a member’s best interest for them to apply for compensation or not. A lot of members will be better off relying on state benefits.”
She added: “The £400m seems to be a kneejerk reaction to adverse press coverage and government does not seem to have thought this through properly – frankly it’s a bit of a mess.”
Field Fisher & Waterhouse head of pensions law, Belinda Benney agreed. She claimed the government’s endorsement of occupational schemes had always been to get people off social security – and the £400m compensation package was no different.
She blamed government for being “unkind” to members of collapsed schemes by announcing a rescue package “not yet off the drawing board”.Benney said workers now know there is a sum of money with their name on it, but have no idea when, how much, or if they will be entitled to a payout.
The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) have launched a refreshed ScamSmart campaign to warn savers about unsolicited pension communications.
Ann Harris OBE and Mike Dailly have been appointed non-executive directors at the upcoming single financial guidance body (SFGB).
Pension schemes are "placing too much focus" on a narrow section of the private debt market where competition is driving down "compelling opportunities", according to Willis Towers Watson.
Barnett Waddingham's head of business development Adrian Cooper has left the consultancy to join TPT Retirement Solutions in a newly-created role.