Forum Brief: Pensions crisis

Monday 10th May 2004 at 12:12 AM

Officials at the Department for Work and Pensions are struggling to draw up a scheme for rescuing workers' pensions in time to head off a possible Labour revolt.

Party Response: Liberal Democrats

Steve Webb MP, Liberal Democrat work and pensions spokesperson, said: "There is no need to look under stones for solutions to the pension crisis when the answers are staring the government in the face.

"There are concrete practical proposals on the table. Compensation can be found without needing to pass the cost to the taxpayer.

"Pensioners who have been ripped off and lost their pension need action not more warm words from the government."

Forum Response: Association of Consulting Actuaries

A spokesman for the ACA said: "The Association of Consulting Actuaries does not support any compensation package for members who have lost out prior to the PPF 'opening its doors' being met by an additional levy on pension schemes.  Any compensation should be met out of contingency reserves or, perhaps, unclaimed assets, which the chancellor has already indicated he is prepared to tap for the benefit of charities.  The real problem will be deciding what is 'fair' compensation. Should this reflect the expected levels of PPF benefits or some lower figure?  Should it reflect the degree of the guarantee given by particular schemes in their paperwork?  How far back should compensation go?  Can compensation for defined benefit members be justified in terms of the much reduced pensions being paid to defined contribution members - compared to their expectations - due to reduced investment returns and low annuity rates? Finally, for the government, there is also the issue of the precedent set by any compensation package - how will this not set other hares running when savers lose out at any time in the future?     
 
"The ACA supports the introduction of the Pension Protection Fund (PPF), although we have urged the government to re-consider the level of benefits, which we believe are overly ambitious, particularly the uncapped benefit for existing pensioners.  We believe there is a danger the cost of the PPF could exceed government estimates if these benefits are not scaled back, requiring high levies from pension schemes." 
 
Forum Response: Age Concern

Director-general of Age Concern Gordon Lishman said:  "It's essential that the government works to resolve the crisis surrounding retrospective compensation as a matter of urgency. The 60,000 workers who have been left with little or no pension through no fault of their own must be compensated and the government must urgently decide where this money will come from. 


"Public confidence in pensions has hit an all-time low and the government must do more to rebuild faith in the system. Compensating these workers will go some way to restoring people's confidence and will send out the message that it's worth saving for retirement. 


"In addition, we would urge the government to focus on making the basic state pension the solid foundation of retirement income on which to build with private and occupational pensions."

 
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