The National Association of Pension Funds has criticized the Government for referring the cost of claims from dissolved compensation schemes to the Pension Protection Fund.
Concern was raised because the Pension Protection Fund is being expected to pick up the pieces for schemes that have never made any contribution to the fund. The association admit that the protection fund is facing a difficult job, but believe that the introduction of risk-based tax is long awaited, saying that well run and well-funded schemes are paying out for the failure of others. They also believe that the cost to the Pension Protection Fund is going to exceed the government's estimate by a substantial margin.
Our view
Yet again, Government rules forced pension funds into difficult positions and now they 'go under', Government expect others to pick up the tab. This is the same across the whole of the finance sector. Well run firms such as pay increasingly more into compensation funds and negligence insurance pools to 'bail out the bad guys'.
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