Three additional schemes have transferred into the Pension Protection Fund (PPF), highlighting the vulnerability of pensions in the current economic climate.
Butler Pension Scheme, Clark & Co (Engineers Grimsby) Pension Scheme, and Clark & Co (Womersley Road) Pension Scheme, which have 275 members between them, have now been taken in.
The PPF works as a ‘rescue fund’ for taking on the pension obligations of firms which collapse or otherwise go into administration.
Funded by an industry-wide levy, it offers compensation to scheme members up to an annual retirement income cap of £30,000.
Generally, PPF members get 90 per cent of the pension income they would have received had their pension provider stayed solvent.
However, some might cancel out this shortfall by taking out an equity release scheme in order to supplement their income.
Figures from the PPF show that a total of 107 schemes have now officially been taken in, with 358 more having applied to be assessed for inclusion.
Since it was established in 2005, the fund has built up 31,729 members and has paid out over £100 million in compensation.
Applications to the PPF are thought to have increased in the recession and credit crunch, which has led to increased numbers of firms entering administration.
Posted by Tom Papworth
