Around 65,000 pension scheme members have already suffered extensive losses following their schemes being wound-up by insolvent employers, reveals new findings by the Department for Work and Pensions.
More than one in two of these members have also lost more than half of their pension savings.
Latest research by the DWP suggests tens of thousands of people have made "significant" losses of 20% or more of their estimated pension benefits because of under-funded scheme wind-ups by their employers.
The DWP estimates the majority of people, who have already lost some or all of the savings, have experienced losses of 30% or more. Some 35,000, however, have made losses of 50% or more.
In May, the government announced it was to launch a £400m 'lifeboat' for these people who have already suffered form their schemes going bust.
The Financial Assistance Scheme (FAS), which will hopefully be in place by spring next year, will give scheme members a certain level of retrospective protection before the proposed Pension Protection Fund comes into effect.
Andrew Smith, secretary of state for work and pensions, says: “For the future our new Pension Protection Fund will provide cover to ensure that even where a firm goes bust employees can still be sure they’ll get a worthwhile pension.
“The £400 million scheme for those who have already lost out is another step that will help to boost confidence in occupational pensions and I hope industry will play its part in that by making a contribution to scheme.
“We hope to have the legislative framework of the scheme in place by spring of next year and making payments as it’s practical," he concludes.
Minister of state for pensions Malcolm Wicks says the DWP research will help outline the finer details of the FAS.
He says: "With the information gathered, we will be working across the coming months with the pensions industry, unions and the business community to put details together on how the FAS is going to work, how much help we can provide to people and how we get that help to them."IFAonline
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