The Government failed to block a series of amendments to its Pensions Bill in the House of Lords yesterday, losing a handful of key votes on the structure of its new pensions protection fund (PPF), which is set to be launched next year.
The controversy surrounds the calculation of the levy which companies will be forced to pay to the PPF. Under the original proposals, the levy was to be a flat fee which would not have taken account of how well-funded each pension scheme was.
Opposition peers argued that such a calculation would amount to a "poll tax" on pension funds, unfairly penalising those that had acted responsibly by forcing them to subsidise funds which lacked financial strength. Their amendment to ensure the levy is calculated on a risk-based system was carried by about 150 to 100 votes.
The fund has been devised to provide a safety net for workers whose pension funds go bust, ensuring that people's retirement savings cannot be wiped out through no fault of their own.
Lord Oakeshott, the Liberal Democrat spokesman for pensions, said: "These amendments have been supported by the industry, particularly the National Association of Pension Funds."
The Pensions Bill is passing through its report stage in the Lords, after which it will return to the Commons for its second reading.Reuse content