UK - The government's £400m compensation package will fall far short of restoring the pensions of 65,000 workers who lost savings when their firms collapsed.
Estimates by the department for work and pensions and the Government Actuary’s Department, claim 65,000 members face cuts of 20% or more in their entitlements. Of these, 50,000 have suffered losses of 40% or more since April 6, 1997 while 35,000 have lost over 50%.
But independent expert Ros Altmann says the true total is far higher as the DWP has excluded several groups from its calculations. She believes that over 75,000 have been affected because all pensioner members have been excluded on the assumption that their schemes’ assets will be sufficient to buyout all their benefits in full, as well as members of schemes where the employer was solvent when the wind-up began.
The government has also excluded an estimated 10,000 people on the grounds they have lost less than £5 per week pension and are therefore not be eligible for any assistance. As a result, Altmann said the £400m rescue package would not provide an adequate pension for wind-up victims.
And she warned that work and pensions secretary Andrew Smith’s assertion that he “hoped the industry would play its part,” indicated the government would be pressing schemes to top-up the compensation fund after.
She said: “The comments accompanying the DWP figures make it clear that the government is still looking for more money from the ‘industry’ to add to the amount the Treasury has set aside. It obviously knows that the amount of government money won’t be enough to give meaningful assistance to all these people.”
ASW scheme member John Hayter agreed and said that rather than ask the industry to top-up the compensation fund, members’ benefits should be fully compensated by the government.
The People's Pension, Atlas Master Trust and The Cheviot Trust have been granted authorisation from The Pensions Regulator (TPR), taking the total number of authorised master trusts to 18.
Pension schemes have been warned they may now face a more challenging legal test if they wish to fix drafting errors.
The Greene King Pension Scheme has appointed XPS Pensions as its actuarial and investment adviser following a competitive tender process.
Professional Pensions has compiled a list charting the progress of master trust authorisation. View our list in full here...