View more on these topics

Ritchie warns pension safety net could fail

The Government should heed the warning from the US experience before setting up a central insurance safety net for occupational pension schemes, says Scottish Equitable pensions development director Stewart Ritchie.

The Department for Work and Pensions is understood to be looking at a central discontinuance fund to bail out members if a big underfunded defined-benefit scheme should be wound up.

But Ritchie says the idea has already been shown to fail in the US, where a state-sponsored scheme is now itself in serious deficit.

Last month, the US Senate heard that the US discontinuance fund fell to a deficit of £2.3bn at the end of 2002 from a surplus of £4.9bn at the end of 2001. US defined-benefit schemes are now underfunded to in excess of £191bn, according to the US government.

Ritchie&#39s warning comes as independent consultant Ros Altmann proposes a limited scheme that guarantees the first £15,000 of retirement income. Such a scheme could be funded by levying member firms or be Government-backed.

Ritchie says: “The worry is the Government will rush in some insurance scheme in haste and repent it at leisure. Such a scheme would create perverse incentives for companies to defer payments into their pension schemes.”

Altmann says: “Unless we offer some protection for final-salary schemes, we should not be running them. At the moment, we are asking people to put all their retirement savings into one share on the FTSE.”

Syndaxi Financial Planning principal Robert Reid says: “I do not see why good companies should bail out those that do not pay their contributions. If the Government wants to increase members&#39 security, it should go back to a proper solvency test.”


Margetts Fund Management – Gerry Anderson Productions

Monday, 31 April 2003 Aim: Growth by investing in a new television series of Captain Scarlet Minimum investment: Lump sum £25,000 Opening/closing date: March 7, 2003/May 29, 2003 Charges: Initial 5.5%, annual up to 1.5% Commission: Initial 3%, renewal 0.25% Tel: 0121 236 2380

Legal & General says its plans can shield Isa cash from risk

Legal & General is urging investors to preserve the funds built up in their Peps or Isas by transferring to its protected index plan 2 or index growth and protection plan.It says many investors have built up big capital sums over the years and may want to protect capital from stockmarket turbulence.It says by transferring […]

SHIP sets up home reversion regulation working party

Consumer protection body Safe Home Income Plans has set up a working party to contribute ideas to the consultation for equity release regulation.Ship has set up the working party following the publication in December 2002 of the Working and Saving for Retirement green paper by the Department for Work and Pensions.Ship chairman Jon King says: […]

Half can&#39t tell bonds from equities

Half of investors do not know the difference between equities and bonds and among the public at large, this figure rises to two out of three, according to research for Invesco Perpetual.The company says this is particularly worrying as corporate bond funds are among the biggest sellers this Isa season, accounting for 22 per cent […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm