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DWP project to set up OPP safety net

The Department for Work and Pensions is working with senior actuaries

on a project to set up a central insurance safety net for

occupational pensions schemes, Money Marketing has learned.

A number of high-profile actuaries have refused to comment on a

secret DWP meeting held last week which is believed to have examined

the cost of a scheme that would guarantee a minimum income for all

final-salary scheme members.

The Government is understood to be concerned that increasing numbers

of defined-benefit scheme members are being asked to contribute to

their scheme yet have no guaranteed payout.

The safety net would be funded by a levy on all final-salary schemes

based on either the number of members or a proportion of

contributions or anticipated benefits. It is unclear whether the

scheme would be guaranteed by the Government.

The idea of a central discontinuance fund has been criticised in the

past for forcing good companies to subsidise bad schemes and pushing

up the cost of FS schemes.

Independent consultant Ros Altmann says: “Unlike personal pensions,

there is no risk warning and no chance of compensation for

misselling. The notion of good and bad sch-emes is flawed. ASW was

thought to be the best scheme in South Wales and look at that fund

now.”

DWP spokesman Emma Quantrill says: “An insurance agreement for

final-salary schemes is under consultation as part of the Green Paper

consultation.”

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