Business calls on Government to underwrite pensions protection scheme

Nearly 90 per cent of employers believe the Government should underwrite the Pension Protection Fund (PPF), according to the Key Pensions Issues survey from Mellon Financial Corporation’s Human Resources & Investor Solutions.

The Government has refused to underwrite the fund, established in the Pensions Bill, and employers taking part in the survey said they do not want to foot the bill for failings of other employers’ pensions policies and business decisions.

The PPF is designed to provide a safety net for pensions schemes that wind-up with insufficient assets after April 2005. However, there has been a lack of sufficient Government support to date for under-funded schemes closing before this date, with only £400m being provided through the Financial Assistance Scheme.

Kevin LeGrand, head of technical services at Mellon and co-author of the report, said: “While Mellon supports the concept of the PPF, we do not believe the funding burden should lie solely with employers who have been diligent in providing for the welfare of their employees in retirement.”

The CBI has also hit out at the Pensions Bill, which finally received the assent of Parliament yesterday, calling it “a wasted opportunity”.

The Bill is set to become law in April 2005.

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