David Willetts, the shadow pensions secretary, yesterday put pressure on the Government to spell out its plans to safeguard company pension schemes, saying its current proposals were in disarray.
In the recent Pensions Bill, the flagship measure was a pension protection fund (PPF), financed by compulsory levies from all pension schemes and designed to bail out schemes of companies that go bust.
Ahead of a debate on the Bill in the House of Commons tomorrow, Mr Willetts has written to Andrew Smith, the Secretary of State for Work and Pensions, demanding that he give more details on how the levy will work.
"If the pension protection fund is to do its job it is vital the fund is established on a sustainable and long-term basis. So far we know next to nothing about how the fund will operate," Mr Willetts said yesterday.
The fund was first mooted in June last year, but the Pensions Bill, published last month, left companies little clearer on how much they much will be charged. To the anger of employer groups, the Government has said the levy will be a flat rate for up to two years before it brings in a risk-based system that takes account of how likely a company is to go bust and how well-funded the scheme is. This delay has angered employer groups, which say strong companies with well-funded pension schemes should not have to prop up weak ones.
"We need to know how the risk-based levy will be set. We need to know why the Government believes the levy will cost £300m when outside estimates are much higher," Mr Willetts said. Some experts have claimed that the levy for FTSE companies alone needs to be in the region of £600m, leading to a figure for the whole industry of more than £1bn.Reuse content