UK - The new Pensions Protection Fund would only cut benefits as a “last resort” says PPF chairman Lawrence Churchill.
He was speaking at the National Association of Pension Funds’ annual conference in Manchester.
He conceded that a cut in benefit could occur as it is mentioned by legislation, but he added: “We would regard it as last resort.”
He also said that if the government stepped in to bail out the PPF, it could look at the £11bn worth of tax benefit rather than immediately increase taxes.
And he added that the PPF would be paying close attention to liabilities when choosing asset allocation.
“We will need to decide on how closely we want payments to be matched,” he said, adding: “We continue to make sure that we have the right balance.”
Churchill also said that the PPF is not considering the situation of the main pension scheme of collapsed car firm Rover. The scheme has entered the assessment period, which could last up to a year.
Anthony Neuberger, a finance professor of the Warwick business School, said that the PPF is a small step in the right direction.
Neuberger called the PPF “a political minefield” and added it is not likely to build up reserves to tackle a “nightmare scenario”. Neuberger based his conclusions on a study on the PPF, in which he was involved.