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.
It was born out of campaigning for workers who were stripped of their pensionsWorkers 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.
In addition, the more banks that have access to my data the greater the chance one of them will let it slip.
We are told our data will be encrypted and shared securely – but they always say that don’t they? No organisation ever says: “We may inadvertently share your data with cyber criminals when we fail to update our systems, install the latest security patch or are hacked. And if this happens, we won’t bother to tell you for at least six months.”
Open banking may offer more convenience but data sharing is not something I will be signing up to.
Property not a quick exit
A warning from Rathbones analyst Alex Moore on extreme valuations of commercial property should sound alarm bells.
Rathbones highlighted that of 326 property funds launched between 2000 and 2009 less than a quarter still exist.
Eight commercial property funds were launched last year in the face of an uncertain outlook for the sector. This is a further reminder that fund managers can still be far too dominated by marketing opportunities rather than investment sense.
Funds investing directly in property can offer an attractive income stream, but they are notoriously illiquid. Those investing in shares can suffer sudden price shocks.
We have been here before, more than once. Once property takes a turn for the worse investors who want to take flight can find their money trapped in a falling asset.
Commercial property investment is all about the long-term income stream. Those looking for capital growth and a quick exit should look elsewhere.
Tony Hazell writes for the Daily Mail's Money Mail section
