UK - Pension Protection Fund costs could be slashed by 20-40% if the government axes special rates for pensioners, the National Association of Pension Funds claims.
Britain’s biggest pension fund – the £26.6bn BT Pension Scheme – believes everyone who falls into the PPF should be treated equally, whereas the government proposes giving 100% of benefits to pensioners and 90% to active and deferred members.
The BT scheme also wants the £25,000 cap on benefits paid to existing members extended to apply to pensioners as well.
Scheme secretary and chief pensions officer Colin Hart-ridge-Price said: “Pensioners get a much better deal than anyone else.
“It would be more proper for there to be a better sharing of pain, so 90% across the board and maybe the cap across the board.
“It would mean benefits were more even for older and younger people. It would also save pension schemes quite a substantial amount.”
The NAPF, which recently set up a committee to look into the PPF, agreed.
Chief executive Christine Farnish (pictured) said: “You could have someone working on the shopfloor a few months off retirement getting 90% of a modest pension capped at £25,000 and a director who has retired early getting a large pension without a cap – it is inequitable.”
She added: “This proposal could also save 20-40% of the total cost of the PPF. We are hoping to work closely with the department for work and pensions on these issues.”
However, the DWP said there were “compelling reasons why pensioners should not suffer a sudden cut in income”.
It continued: “Firstly, their chances of finding work would be severely reduced and secondly that they will have a certain standard of living and would have made adjustments based on their existing income, and the current rules fully protect them.”
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