New measures introduced to protect pensions
12 February 2004
In an effort to stop the growing number of difficulties with pensions, the government has today announced a package of measures designed to increase safeguards when firms go bust.
An increasing number of people have been putting money into pensions throughout their working lives but ended up with nothing when their employers go to the wall.
But the new Pensions Bill includes the creation of the Pension Protection Fund, which will provide new security for pension scheme members.
Employers will be required to contribute to the Protection Fund that will guarantee workers' retirements in the event of a fund being under-funded or closed when a firm goes bust.
A flexible Pensions Regulator will complement the Fund to make it easier for businesses to get on with running good pension schemes. It will focus on the under-funding, fraud and mal-administration that can threaten members' benefits, whilst minimising interference for well run schemes.
Work and pensions secretary, Andrew Smith said: "Where companies with under-funded pensions have gone bust, workers have found themselves severely short-changed on the pension they were expecting.
"With the Pension Protection Fund, people in pension schemes can be much surer that they will get the pension they were promised."
The government's plans have been criticised for being "half baked" by the Liberal Democrats.