The Government is considering legislative changes following news that a collapsed pension scheme is not eligible for the Pension Protection Fund, according to law firm Nabarro.
Last week, Saga director-general Ros Altmann criticised the lifeboat fund’s decision to reject the 40-member G+H pension scheme as it did not fall under the Pensions Act 2004 definition of a “sponsoring employer”.
She said the trustees’ application for support had been turned down because in 2002, when now defunct firm Zejwa took responsibility for the pension fund, the scheme was already closed.
As a result, no members had accrued extra benefits since and Zejwa was not considered to legally be a “sponsoring employer”.
But Zejwa’s management supported the scheme, which has a £1m deficit, until its insolvency last year, paying an annual levy to the PPF.
Altmann has accused the PPF, which has offered to refund the levy payments, of trying to “wash its hands” of the situation. She says assurances previously given about PPF protection “have turned out to be false” and has called on the Government to amend legislation “immediately”.
Altmann says: “This is abso-lutely astonishing and it seems that, because under the terms of the 1995 Pensions Act there is no section 75 debt due, the PPF is saying it cannot accept the scheme.”
Nabarro partner Anne-Marie Winton says: “This case shows that unless and until the PPF legislation is amended, where former employers no longer exist, members can be up a creek without a paddle.”
A DWP spokeswoman confirmed that officials are look- ing into the issue and will consider changes to the legislation if schemes are not protected properly.