The government's proposed Pension Protection Fund (PPF) suffers from fundamental flaws and could go the same way as the pension schemes it is supposed to protect, leading actuaries warn.
In a written letter to the Secretary of State for Work & Pensions Andrew Smith, four senior UK actuaries say the government must ensure pensions savers know exactly how the PPF is going to work if it wants to avoid repeating past mistakes.
Institute of Actuaries president Jeremy Goford and president-elect Michael Pomery, and Faculty of Actuaries president Tom Ross and vice-president Harvie Brown say the fund requires clear objectives to avoid confusion.
In their letter to the Smith they state: "The outline in the Pensions Bill suggests that the PPF will operate like a pension fund. As such, it would be subject in the future to the same risks of failures as those which have given rise to the need for the PPF in the first place."
They also have "serious concern" about how the Fund will work in practice, if proposals set out in the Pensions Bill remain unaltered.
The government describes the PPF in the Bill as an "insurance fund". However, the DWP has to set up and run the PPF as a proper insurance company if it wants to retain its own pension promises, the actuaries caution.
For the government to treat the PPF as an insurance fund, "the PPF must be set up and operated like an insurance company, subject to full insurance supervision and solvency regulations", they add.Pensions, Pension Protection Fund, Government, UK, pension schemes
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