'Pension safety net' worries FDs
The 'pensions safety net' planned by the government to protect workers whose employers go bankrupt has finance directors worried, a study has found.
Insurance Group Prudential said almost half (42%) had reservations about the Pension Protection Fund, which would see firms levied to create a ‘lifeboat’ kitty for workers whose own schemes sink when their companies go bust.
Many FDs said they feared that efficiently run pension schemes would have to bail out inefficient ones. A third also voiced concern over proposals to make solvent companies buy out members’ benefits in full when winding up final salary pension schemes. It was feared the cost could push borderline cases into insolvency.
Ted Clack, director of risk management for pension schemes at Prudential said: ‘Offering Defined Benefit pension scheme members a lifeboat following wind-up is a move in the right direction. But there are key concerns within business about how the proposals will work in practice.’