UK - Compensating scheme members who lost their pension pots when their firms collapsed will cost less than a "hundred million pounds" a year.
Initial estimates from research being carried out by Eversheds partner Giles Orton (pictured) and the government’s pension adviser Ros Altmann show the total cost over 40 years could be around £4bn. This is “well below” figures touted in the industry which have suggested it could be as much as £8bn.
Orton – who is the Association of Corporate Trustees’ pensioner committee chairman – has been working with a team of pension experts during the past month to calculate the cost of repaying some 60,000 workers.
His aim has been to find out the number of schemes that have wound up in deficit because of company insolvency since 1997, the number of scheme members affected and the amount they have lost.
Full results will not be released until the end of the month but Orton told PP that initial indications showed the cost could be much less than earlier estimates.
He added: “Considering the government raid of £5bn a year from pension funds, this cost may not be that significant.”
Altmann – a governor at the London School of Economics – stressed the figures were first estimates but said the aim was to ensure the government could no longer hide behind the “excuse” it could not compensate until it knew the full cost.
She said: “I hope we will have the ability to convince the government this is a doable proposition.”
However, the department for work and pensions said the new figures “would not change” its stance on compensation.
“We will continue to meet with those who have suggestions as to the best way this can be resolved but it remains a complex and difficult area.”
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