Minister calms fears over Pensions Bill

Click to follow
The Independent Online

The Government moved to calm angry business leaders and pension campaigners yesterday, clarifying controversial clauses in the Pensions Bill which are threatening to dump the pension liabilities of already troubled companies on to the privately funded pensions protection fund (PPF) which launches in April.

The Government moved to calm angry business leaders and pension campaigners yesterday, clarifying controversial clauses in the Pensions Bill which are threatening to dump the pension liabilities of already troubled companies on to the privately funded pensions protection fund (PPF) which launches in April.

In a statement released yesterday, Malcolm Wicks, the Pensions minister, said that any schemes which begin winding up before April, will qualify for compensation from the Government-funded Financial Assistance Scheme (FAS).

However, he stopped short of guaranteeing that those companies already insolvent and with large pension deficits, such as Turner & Newall, but do not wind up until after April, will not be able to claim on the PPF.

The move has created the extraordinary situation, whereby if T&N begins the inevitable wind-up of its pension scheme before April, the Government will have responsibility for plugging the deficit. While if T&N begins wind-up after April, the PPF, funded by private companies, will have to pick up the tab.

Ros Altmann, a pensions adviser to the Government, said that with the FAS already badly underfunded, the idea of giving more people a claim to the £400m which the Government has set aside was laughable.

She added that the Government's pledge to put just £20m a year for the next two decades into the FAS would provide pensions of £6,000 for just 130 people. Some 65,000 workers already have a claim on the FAS, while T&N would add another 40,000 people into the equation.

Comments