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Altmann fears firms dumping liabilities in protection fund

Independent consultant Ros Altmann, who convinced the Government to bring in a pension protection fund, says the way the fund has been drafted could lead to teetering companies dumping it full of liabilities in the first year.

The plans were published in last week&#39s Pensions Bill.

Altmann says the Department for Work and Pensions&#39 decision to make contributions flat rate in the first years rather than include a risk-based premium for poorly funded schemes means that good companies will foot the bill of negligent rivals. She is also asking the FSA to streamline the advice process by allowing initial stages of a full independent advice assessment to be carried out in large groups.

Altmann&#39s plan would see groups of up to 50 employees go through initial fact-finds together, with a 30-minute face-to-face session with an IFA once all initial data had been collated. The service could be offered to employees by advisers taking commission on any products sold, with no cost to employers.

Altmann says: “I am disappointed that the DWP is unable to implement a risk-based approach from day one. A lot of insolvent schemes are waiting for the PPF to be set up so they can dump their funds in it.

“The problem is that the DWP has failed to address the issue of how to work out the levy for underfunding. It is parked in the too-difficult box.”

A&B head of pensions Michelle Cracknell says: “I agree with the principle of getting groups of employees together and a lot of advisers would be prepared to go into companies without a fee on this basis. But although a questionnaire can make giving advice easier, it is not a panacea for all evils.”

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