MG Rover employees will have to wait until 9th May to find out if their pensions are covered by the new Pensions Protection Fund. The fund received notice on 11th April, and has 28 days to determine if it was a qualifying insolvency event and an eligible scheme. After this, the scheme will go through an assessment period. Employees may then have to wait for over a year to receive payouts, because this is the minimum period for the PPF assessment. During this time the Pensions Protection Fund will establish whether the scheme can continue as a going concern, or pay compensation to the car groups employees.
Our view
The Pension Protection Fund is a new compensation fund started to protect members of pension funds were companies go into liquidation. It is unfortunate that in such early days of the fund it may be called upon to deal with potentially large compensation claims. Guess who pays the compensation? Other pension funds. Therefore, all who have a pension end up paying.