PPF rescues 6,200 Rover pensions

Placard on the gates of the closed Longbridge car plant in 2005

More than 6,000 former employees of the MG Rover car company will in future receive their pensions from the Pension Protection Fund (PPF).

A year and a half after applying to be rescued when the company went bust, the MG Rover pension scheme has now become the full responsibility of the PPF.

The scheme is the largest yet to be fully absorbed by the fund.

The PPF was set up in 2005 to provide a safety net for insolvent schemes and pays 90% of promised pensions.

With five other schemes being taken on, the Rover scheme brings to nine the total which have, so far, been transferred to the PPF.

"We are here to safeguard the savings of the 12 million people who are members of eligible defined benefit occupational pension schemes," said the PPF chief executive, Partha Dasgupta.

"The payments we will now make show we are doing just that and those affected can be reassured that their income every month comes from a known, trusted and stable source."

Bigger pension

Among the former MG Rover workers who can look forward to a healthier retirement is Robert Lealand from West Hagley near Stourbridge.

To have invested in my pension for 26 and lost it all would have been a huge blow Robert Lealand, Rover pensioner

After working at the firm's Longbridge plant for 26 years he faced the possibility of losing more than £2,343 in annual pension and £13,286 in tax free cash.

"We had no idea that things were going so wrong with the company and it was a big worry when it all collapsed," he said.

"At that stage, we did not know whether I would get my pension or not.

"To have invested in my pension for 26 and lost it all would have been a huge blow," he added.

Now he will get £6,894 and a tax free lump sum of £39,077, paid directly by the PPF.

Year's assessment

The PPF spends at least a year assessing any scheme which is put forward for a rescue, typically by the administrators of an insolvent company.

Once that period is over its assets are absorbed into the PPF's own fund and the PPF takes full responsibility for paying current and future pensioners.

Not all schemes that apply for a rescue turn out to be eligible to be bailed out.

So far, four have been rejected on the grounds that they were not, in fact, underfunded enough to qualify or were rescued by new buyers for their employer.

Another 65 schemes are in the PPF's pipeline to be taken on in the coming financial year, with about 150 in total in assessment.

"It sends out an important message of reassurance to more than 100,000 scheme members currently in assessment, and to scheme members set to come through our doors in the future, that they can look forward to security in retirement," said PPF chairman, Lawrence Churchill.

The PPF took on its first three schemes last December.

The other five being absorbed today are those of Solid State Logic, Fiege Merlin, Bristol Community Sport, Beaujersey and Pearce Motors (part of the Motor Industry Pension Plan) - with 566 current and prospective pensioners between them.

People who are pensioners at the time their scheme becomes insolvent are paid 100% of their pensions by the PPF; those who retire after insolvency will get 90% of their expected pension, up to £26,050 a year.