UK - Pensions ombudsman David Laverick is urging the government to set up a central discontinuance fund as mooted in its Green Paper.
Laverick expressed frustration that in cases where a scheme’s sponsoring employer had gone bust, there was little that could be done to help scheme members.
A “modified version” of a CDF is his preferred option.
He explained: “Scheme wind-ups where the employer has gone into liquidation create particular problems and often lead to an unsatisfactory situation.
“People are getting far less benefits than they are entitled to but it isn’t the result of maladministration.
“There needs to be an underlying security measure to encourage people to use occupational pension schemes. My preference is for a central discontinuance fund.”
But he warned that any such scheme must allow for an opt-out for pension funds that could demonstrate they have obtained “adequate private insurance”.
He explained: “This is to beat the objection those people who say: ‘We, as a good scheme, are not in any danger of needing to call upon this fund, so why should we be funding the cowboys of the world?’.
“If you can show you have an adequate indemnity insurance then you can be excused the levy that would otherwise fall to provide the CDF.”
*Earlier this month it was revealed the ombudsman was in discussions with the department for work and pensions over wholesale changes to the way his office works.
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