UK - Describing the Pension Protection Fund as an "insurance" is dangerous and will lead to misconceptions, Hewitt Bacon & Woodrow warns.
Its latest Analysis report says that while the PPF has been widely described – including by the government – as an insurance fund, people must be aware it does not offer a “cast-iron guarantee” they will receive their final salary benefits.
The report says: “This is dangerous because it implies benefits are fully guaranteed, and that in the event of a scheme going bust, the ‘insured’ benefits will be paid out.
“However, the PPF is actually being established on the basis that benefits can be cut back if it cannot afford to pay out the full amount.
“Although it is understandable that politicians and laymen are not as concerned as actuaries by what they see as a rather technical distinction between insurance funds and pensions funds, the public must be told honestly that the PPF is not a cast-iron guarantee.”
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