Forum Brief: Pensions Bill

Derek Brownlee, pensions executive at the Institute of Directors, said: "It's probably right that the Pensions Protection Fund itself isn't retrospective, since that would mean companies paying the PPF levy would pay even more. However many of the people who have lost their pensions, and who will not get compensation under current plans, were never told that their pension was in any way at risk. They were also doing the responsible thing - saving for their retirement.

"If some form of compensation isn't provided, it will public undermine confidence in the pensions system. The first step should be to quantify the problem, and identify a realistic cost of providing some form of pension to those affected workers, before looking at the various funding options."

Forum Response: National Consumers Council

Ed Mayo, NCC chief executive, said: "Of course it’s important that company schemes become more flexible and that peoples’ pension entitlements are protected. But company schemes – no matter how well they are run – are just one small piece in the big and complex pensions jigsaw.

"Only a little over half  (56 per cent) of people in work belong to a company or private pension. The best type of company scheme - final salary - is on the decline. People whose earnings are low are less likely to have pensions savings that will top up their state pension when they retire. What’s more, state means-tested top-ups don’t compensate for low pensions. Clearly, on its own, the Pensions Bill cannot solve the current pensions crisis.

"That’s why the Bill must mark the start of a radical overhaul of the entire UK pensions framework that will give everyone the security of an adequate basic state pension."

Forum Response: Age Concern

Gordon Lishman, Age Concern's director-general said: "It is extremely disappointing that the government has failed to amend the Pensions Bill to ensure retrospective compensation for workers who are now living on next to nothing because their employer has gone bust. Justice demands that people who had been led to believe that their pensions were safe should not lose out through no fault of their own.

"If the government is not prepared to fund the compensation, it should consider other options such as the use of orphan funds. Compensating these workers would also help to restore people's confidence in pensions and send an important message that saving reaps rewards in retirement.

"Although there are some positive proposals in this bill, we are disappointed that the government has delivered a patchwork of improvements and reform, rather than the complete overhaul of private and state pensions that is so urgently needed."