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The Government’s plan to offer £400m as part of a Pension Protection Fund (PPF) could be dwarfed by a £10bn compensation bill from the Parliamentary Ombudsman.
The PPF is intended to provide better protection for the accrued rights of staff with defined benefit occupational pension schemes in organisations that become insolvent.
It is the flagship of the Government's Pensions Bill and is expected to start in April 2005.
However, an investigation into allegations that the Government mislead workers into believing company pension schemes were safe and protected by law will report tomorrow and could force the Treasury to pay up to £10bn in compensation.
About 65,000 people lost their savings after poor stock market performance forced the closure of many final salary schemes.
