Thank God for the Pension Protection Fund. Without this vital resource more than 27,500 Carillion scheme members would now be contemplating retirement misery.
Instead, they know that even in the worst-case scenario the vast majority of their pension will be safe.
Their benefits may be reduced but they will not be facing penury in old age.
The idea for ATOL-style protection for pensions was first floated by veteran personal finance editor and long-time FA columnist Jeff Prestridge with – I believe – Ros Altmann.
It was born out of campaigning for workers who were stripped of their pensions when companies went bust or directors ran off with the money.
Since it launched in 2004, more than 230,000 pensions have been transferred to the fund. Figures from last October show that of those 124,705 were receiving compensation averaging £4,292 a year.
Workers from companies as disparate as Olympic Airlines, Pilkington Tiles, Diamond H Controls and Thomson Directories all have their pensions protected by the fund.
Carillion’s 13 pension schemes are likely to push the total saved beyond the quarter of a million mark.
These schemes have a £600m black hole and need to pay pensions of 13,000 retired people, as well as protecting those of active members.
Those already retired will see the inflation link on their pension reduced or severed. Those working will see reductions of 10 per cent in their pension – and more in the case of those with the biggest pots as there is a cap of £34,655.05 a year for those with less than 20 years service.
But the alternative would have seen the scheme put into wind-up and members possibly waiting for many years before discovering how much they were entitled to.
I well recall the despairing calls from members of schemes placed into wind-up who were working well beyond retirement age and wondered whether they would ever see any of their pension.
The PPF has its critics, not least because it is part-funded by levies on all eligible schemes, but it is far better than the alternative of leaving workers pensionless while smug directors of failed companies hide in their mansions or overseas holiday homes.
Journalists receive a lot of criticism, but without Jeff’s campaigning this fund would never have seen the light of day. It is something he should be very proud of and for which we should be very grateful.
Should banks be data-sharing?
Open banking is the buzz phrase at the moment. The idea is that banks should be able to share our data with our permission – as opposed to the current situation where it is exposed to fraudsters without our permission.
Now I’m not sure how you feel about this but the idea of allowing data sharing between banks scares the willies out me.
Apparently banks and building societies should be able to offer better deals. That sounds like a charter for junk mail and cold-calling.