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Last Updated: Saturday, 13 November, 2004, 16:04 GMT
Row over pension assistance fund
By Paul Lewis
BBC Radio 4's Money Box

Pensions Minister Malcolm Wicks
The government will not put any more money into the scheme
A government minister has said it was "disappointing" that the pensions industry was not contributing to a government scheme to help pension funds that were in trouble.

Pensions Minister Malcolm Wicks made the comment when explaining the government's new policy to extend the Financial Assistance Scheme to cover pension funds that failed between May 2004 and April 2005.

Initially, the scheme only covered pension funds that got into difficulties prior to May 2004, which left a gap before the new Pension Protection Fund begins in April 2005.

Despite the extension, Mr Wicks said the government would not put any more money into the scheme other than the 400m it had already set aside.

That means the money will now be stretched more thinly, and the troubled funds will receive less help.

'Similar obligation'

Speaking on BBC Radio 4's Money Box programme, Mr Wicks said "I think it is disappointing frankly that the pensions industry could not recognise that it would be sensible for them to make a contribution to the Financial Assistance Scheme.

"Just as the government has an interest in bringing back confidence and security to occupational pensions, you would think the pensions industry would feel they had a similar obligation."

I do not know what planet he is on
Christine Farnish, NAPF
But there was a swift response from the industry to the minister's suggestion that it should also pay into the scheme.

Christine Farnish, Chief Executive of the National Association of Pension Funds told the programme:

"I do not know what planet he is on. Our members are struggling like crazy to keep their current schemes going.

"They face deficits of between 60 billion and 100 billion and from next year they are going to have to cough up around 300 million for the Pension Protection Fund."

"I do not think you [restore confidence] by regulating and loading costs on what was once our very proud occupational pension system so that schemes continue to close in scores and companies are no longer interested."

'1 per day'

Pension campaigners were also critical of the extension of the scheme with no extra money. Andrew Parr, whose own pension is under threat after the collapse two years ago of the steelmaker ASW, said:

"If some companies go into receivership between now and April, the money that people who have already lost their pensions will get, will go down.

The more money we have, including a contribution from industry, the better we would be able to provide a decent assistance
Malcolm Wicks, Pensions Minister
"If you do the figures for the FAS it sounds a lot of money, but if you spread it among all the people who have lost their pension it is about a pound a person per day."

And even the minister seemed to accept that the money the government had provided may not be enough. He said:

"In order to give as good a deal as possible to those who through no fault of their own have seen their company pension scheme in dire straits, then obviously the more money we have, including a contribution from industry, the better we would be able to provide a decent assistance plan for the individual.

"That is just sheer arithmetic."

BBC Radio 4's Money Box was broadcast on Saturday, 13 November, 2004 at 1204 GMT.

The programme was repeated on Sunday, 14 November, at 2102 GMT.



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SEE ALSO:
Have your say: Pension fears
12 Nov 04 |  Moneybox
Pension bail out fears
12 Nov 04 |  Moneybox
Government accused over pensions
18 Sep 04 |  Moneybox
Pension fund not enough
10 Jul 04 |  Moneybox


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