Opposition peers shall today try to derail a key point relating to the Pension Protection Fund in the Pensions Bill, during its report stage reading in the House of Lords.
The peers are angered by the government’s proposal to provide risk-free pensions to the staff and board of the PPF, a quango to be funded by companies whose own pension schemes are wiped out or contain huge deficits. The government intends that from April 2005, contributors to occupational pension schemes shall be “more assured of getting the kind of level of retirement income they were promised.”
Liberal Democrat pensions spokesman Lord Oakeshott of Seagrove has accused the government of “hypocrisy”, in awarding the PPF’s staff civil service pensions despite refusing to fund the PPF or back it as an insurer of last resort. Lord Oakeshott has argued that the PPF’s employees should “understand the risks of their customers,” and that their pension arrangements should be contributory.
In February, Andrew Smith, Minister for Works and Pensions, told the House of Commons that “We will make sure that in future individuals in final salary schemes will never again face the injustice of saving throughout their lives only to have their hard-earned pension slashed just before they retire. The Pension Protection Fund will allow individuals to save with confidence.”
A spokesperson for the Department of Works and Pensions told Business Management Zone that a civil service-style salary was “easier and more cost-efficient.” She said that even though the scheme is not underwritten by government, “we’ve done the sums and we’re confident that it provides the reassurance that schemes need.”
The PPF, currently chaired by Lawrence Churchill, is recruiting for a director of finance and investment, and a director of operations. Both roles will be based in Brighton and command six figure salaries. Civil service-style pensions can be expected.