UK - Calls for the government to underwrite the Pension Protection Fund have been described as "outrageous" by its inaugural chairman, Lawrence Churchill.
In an exclusive interview with PP, the former Zurich Financial Services chief executive said it was not the government’s responsibility to bail out schemes which experienced financial difficulties.
The government’s refusal to underwrite the PPF – which offers 100% protection for retired members and 90% for actives – has been widely criticised.
But Churchill said: “In my view, the reason why the government should not step in is that this is the failure of a private employment contract between an employer and employees for deferred pay.
“The thought that government will step in whenever any contract between two private individuals fails is an outrageous concept.
“The government has said it wants the PPF to run at arm’s length from it. It will run at arm’s length from it.”
And he denied the fund could become insolvent.
“We have been given specific powers to vary the levy to make sure our funding position is adequate and have been given powers to vary the liabilities so I do not see how that situation will arise at all.”
But National Association of Pension Funds chairman Terry Faulkner (pictured) questioned whether it was appropriate for Churchill to “wade into the political debate” while still getting to grips with workplace pension issues.
Faulkner added: “The issue is not whether the PPF can become insolvent. It is about whether it will truly protect the benefits of insolvent companies’ pension scheme members if the PPF board has the power to cut benefits.”
Association of Consulting Actuaries chairman Adrian Waddingham also disagreed with the new PPF chairman.
“Members think it is an insured scheme, but without anyone to underwrite it, it is not. We are running the risk of disappointing members twice over.”
The Centre for Social Justice is calling for the state pension age to be raised to 70 by 2028 and to 75 by 2035, a much faster rise than currently planned.
The High Court has blocked the £12bn transfer of Prudential's annuity book to Rothesay Life, citing the insurer's lack of "established reputation" and differing "capital management policies".
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