UK - Using unclaimed pension assets to boost the pensions of those who lost out when their companies went bust could be a legal and administrative minefield, according to an interim report from senior government actuary Andrew Young.
Young was appointed to review the government’s Financial Assistance Scheme (FAS), set up to compensate the 125,000 people who lost their occupational pensions when their employers went bust.
His warning comes ahead of the government’s attempts tomorrow to avoid defeat in the Commons over cross-party amendments already passed by the House of Lords.
This would force the government to set up a “lifeboat fund” for the 125,000 people who lost out.
The amendments require the government to make a loan to the FAS, while ministers investigate what unclaimed assets could be annexed from banks, building societies and other financial institutions to pay that off.
Although unclaimed personal pensions and life assurance policies might theoretically provide a new source of funding, the interim report said: “There would be very substantial legislative and administrative barriers to establishing such a scheme with a very uncertain outcome.”
Despite this, Young said the review team believed the issue deserved further investigation and more work was needed for the final report, which is due to be published later this year.
Reacting to the cross-party amendments, Stephen Haddrill, director-general of the Association of British Insurers (ABI) warned the “savings of millions of people were at risk”.
His comments came amid reports the government was considering targeting £20bn of surplus cash from the nation’s life assurance policies to plug gaps in the FAS.
The ABI also dismissed the claim by pensions specialist Ros Altmann that it was trying to stop Parliament provide a fair settlement to victims of pension scheme wind-up.
A spokesman said the amendments were not the right way forward legislatively or administratively.
Ex-BHS owner Dominic Chappell has been ordered to pay a total of £87,000 in fines and court costs after he was found guilty of failing to provide The Pensions Regulator (TPR) with information.
The Department for Work and Pensions (DWP) has said it while believes in the benefits of consolidating defined benefit (DB) schemes, there are significant issues to overcome.
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