Tory government would not prop up Pensions Protection Fund

Wednesday, 13 January 2010 12:16

By myfinances.co.uk staff

Shadow pensions minister Nigel Waterson has said a future Conservative government will not rescue the Pension Protection Fund (PPF) should the compensation scheme fall into hardship.

Mr Waterson said the Tories will continue the policy adopted by the government and not bail-out the PPF - the body that pays compensation to members of defined benefit pension schemes - if it runs short of funds.

At an event hosted by website headlinemoney, he said guaranteed government support of the PPF might "produce unintended consequences and enable people to feel they could be more lax in running their pension schemes"

He said it was important to have some distance between the government of the day and the PPF, otherwise "it could produce a feeling that there is always a recourse there to the taxpayer".

The Conservative stance would continue the policy adopted by the current government, although Labour has helped the PPF indirectly by financially supporting banks, thereby preventing their pension schemes from being added to those already run by the PPF.

Meanwhile, the PPF said the financial health of the UK's final salary pension schemes improved during December, with the collective deficit falling from £93bn to just £33 billion.

Improving stock market returns and bond yields helped strengthen the funding position of schemes over the past year, adds the PPF.

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