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AVCs could lose out to fat cats in Bill change

A Pensions Bill amendment could see people who have made additional voluntary contributions lose their money to fat-cat directors, warns an occupational pension consultancy.

The amendment, made by the House of Lords last week, will overturn the current situation where money invested through AVCs is the first to be ringfenced on scheme wind-up.

First Actuarial director Alan Smith says the situation would be most likely to arise when a scheme is ref-erred to the pension protection fund but has, including these AVC funds, just enough assets to cover its PPF liabilities.

Smith says the position regarding money-purchase AVC schemes is unclear as these could also be at risk from the amendment.

He says: “Women really are likely to lose the most and Turner has pointed out that women are signific-antly poorer that their male counterparts in retirement.

“Imagine how pleased a female employee would be to see her hard-earned savings go towards a pension of £75,000 a year which is already in payment to a retired director.”

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