Secretary of State for Work and Pensions Andrew Smith MP yesterday said the Pensions Protection Fund will ensure people's savings are "secure" if their company goes bust, contrary to previous government announcement admitting it will not offer any guarantees.
Speaking at the NAPF conference in Glasgow, Smith praised the introduction of the Fund saying it should increase people's confidence in pensions by offering them a safety net if their scheme would wind-up.
"It will benefit at least 13 million members by giving them the peace of mind they need to go ahead and pay into their company scheme, safe in the knowledge they will still have secure retirement even if their company goes bust," he said.
However, his statement come in stark contrast to the view expressed by the DWP in the Pensions Bill, which states the PPF will not offer scheme members any guarantees.
The PPF, which will be coming into force next year, has been created to further protect employees saving money into occupational pensions schemes. Under coming legislation, people already in retirement will receive 100% of their benefits from the Fund if the company goes bust and people who are still in employment will be paid 90%.
That said, industry experts have previously pointed out the Fund may itself go bust as it neither will work as an insurance scheme nor will have any financial backing from the government.
Smith was also faced with questions yesterday about members who have already lost some or all of their retirement savings. Refusing to comment on this, he said he was "not in a position here this afternoon to come up with a solution".
"I'm not going to get into speculation," Smith added at the time, but has since confessed to NAPF chairman Terry Fulkner he was not allowed to announce the additional £440m fund until today (Friday).IFAonline
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