UK - Pension schemes may be forced to help pay retrospective compensation in three years because the government has not set aside enough money.
The department for work and pensions said it would “not rule out” the possibility of imposing a levy on sponsoring employers to help fund the scheme – which is being introduced via an amendment to the Pensions Bill – after a three-year review.
The government has pledged £400m over 20 years to help around 60,000 scheme members who lost their pension savings when their firms collapsed.
But critics claimed the government’s offer was “far too low” and would provide a pension of less than £350 a year for each of those affected.
The DWP said: “We are going to be looking to the industry for some support, but we don’t know what support that will be at this stage.
“Some financial assistance will increase confidence in pensions, but we are still talking to industry about what level they will want to make. What will happen at that three-year review stage we don’t know. Nothing has been ruled out.”
The Confederation of British Industry’s pensions policy officer, Jay Sheth, said businesses would be outraged if they were forced to make any additional financial contribution.
“Certainly we would be very unhappy if business was being compelled to pay for retrospective compensation.”
Sheth said there was little chance schemes would contribute money voluntarily.
“In the present climate when occupational pension schemes are under such pressure and with the PPF levy coming in it may be unlikely to raise much from voluntary contributions.”
National Association of Pension Funds chairman Terry Faulkner (pictured) said: “Andrew Smith has said consistently that the levy being charged to schemes is for future funds. To change the Bill now, to call on industry to provide some retrospective compensation at some later stage would be outrageous.”
He added: “It would be absolutely out of the question for the government to revert to the requirement for a direct financial contribution from pension schemes and employers.”
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