Fears of the PPF's collapse are overstated, according to a Pensions Management expert.
An industry expert attempted today to quell savers' fears over the financial health of the Pension Protection Fund (PPF).
Charlie Kirby from Pensions Management magazine said that the fund was unlikely to collapse, despite facing increasing demand due to the general economic downturn. The PPF, which covers payments for pension schemes whose operators are forced into administration, announced recently that it had taken on its 100th member.
Savers who are forced to transfer to the PPF and have not yet retired are given 90 percent of the pensions income they would have otherwise received, while those who are already retired receive 100 percent. Annual pension incomes for PPF members are capped at £28,742 and £31,936 respectively.
The credit crunch and recession has put many more companies at risk of bankruptcy, meaning that increasing numbers of workplace pension schemes could collapse and then apply to enter the PPF. Indeed, the fund recently announced that it had a backlog of 290 applications to work through.
Mr Kirby said: "Every time a new scheme goes into the PPF there seems to be a panic wave of employers claiming that the fund won't be able to cope… It's not panic stations yet but it is interesting to look at the impact of all the new schemes that are falling into the PPF scheme."
Around 30,000 savers are currently covered by the PPF. Recent research from the fund showed that Britain's defined benefit schemes had net deficits of £242 billion at the end of last month.
