UK - Pension Protection Fund officials will need "psychic powers" to separate deserving firms from unscrupulous claimants, industry experts warn.
The department for work and pensions says the agency assigned to run the PPF – which will be set up as a standalone statutory body – will have “information sharing powers” with the pensions regulator and will investigate the validity of insolvent companies’ claims.
The DWP believes these measures will act as a safety net against unscrupulous claims from firms “hanging in there” to take advantage after the PPF is launched in 2005.
A DWP spokeswoman said: “We’ll have information sharing powers with the pensions regulator because obviously there is a risk of moral hazard. Basically, we’ll look at what trustees are doing and we’ll see where assets are being deliberately managed in this way.”
But Hewitt Bacon & Wood-row principal Raj Mody (pictured) att-acked the government plans and said that the agency would need “Mystic Meg-type psychic abilities” to be able to determine whether a scheme des-erved to be rescued by the PPF.
Mody added: “There are schemes that are underfunded and have weak company sponsors that are more likely to have to draw on the PPF as and when that regime comes in.
“I don’t think you can say with so much certainty at the outset to exclude schemes from that provision.”
Mercer Human Resource Consulting worldwide partner Peter Thompson agreed.
He warned: “This is a potential can of worms. You can imagine a case at the borderline. Is someone going to have to mount a court challenge if they’re declined a case because they think that they’re hanging in there? Will the liquidator, the trustees and all the members be able to take them to court?”
Businesses are experiencing auto-enrolment data error rates of up to 50%, posing questions over the reliability of pension records, Pensionsync says.
A nationwide survey of committee and local pension board members of the Local Government Pension Scheme has revealed high levels of confidence in all areas of their responsibility.
UK inflation unexpectedly rose to 2.7% in August, beating analysts' expectations of a drop to 2.4% from 2.5% the previous month.