Pension experts issue protection fund warning

01/12/2008

People's prospects of enjoying a comfortable retirement could be severely affected by the ongoing financial downturn, a trade body has suggested.

The Society of Pension Consultants (SPC) has written to pensions minister Rosie Winterton, saying that the Pension Protection Fund (PPF) could be in need of extra government support in the manner of a bank bailout, the Daily Telegraph reports.

Increasing numbers of companies are expected to go bust due to the credit crunch, putting extra pressure on the PPF, which functions as a compensation scheme for pension savers whose workplace pension provider collapses.

Failed bank Lehman Brothers has already applied for PPF support, while Woolworths, which announced that it was to go into administration next week, is expected to follow suit.

"A commitment [is needed] from the government to stand behind the PPF financially in a similar form to the guarantees now commonplace in the banking sector," the SPC said in its letter.

Speaking to the newspaper, SPC council member Kevin LeGrand added: "There is no doubt that the problems that we highlight are real and because of the size of UK pension liabilities have the potential to derail the economy if not handled correctly."

Tags; Current UK Economy, Retirement Money Problems,

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