UK - The government has named Andrew Young, directing actuary at the Government Actuary's Department, as head of the review of compensation for people in bankrupt pension schemes.
Last month chancellor Gordon Brown promised to quadruple the money in the Financial Assistance Scheme (FAS) to £8bn (€12bn). This means that "affected people's pensions will be topped up to 80% of their core pension expectation", said pensions reform minister James Purnell.
The reviewers of the FAS are to look at how best to use assets in schemes that are being wound up and what additional sources of non-public funding could be used for compensation, the minister said.
An initial report is expected in the summer and a full report at the end of the year.
Meanwhile, the government might be facing another wave of insufficient pension provision under the new Personal Accounts scheme to be introduced from 2012 the Pensions Institute warns.
In a recent report the team at the Cass Business School found that default options in DC schemes are not necessarily the best option for employees although - according to NAPF data almost 90% of DC scheme members stay in the default option.
"We analysed traditional default fund structures and fond them often wanting," David Blake, director of the Pensions Institute, said.
"It is evident that 'reluctant investors' in DC schemes assume that the default fund has been chosen to meet their specific needs," Debbie Harrison, co-author of the report, pointed out.
The institute urges regulators to encourage employers, trustees and advisers "to take a greater fiduciary role and protect them through 'safe harbour' rules that restrict liability, provided due diligence has been done". A key duty for these players should be the selection of the default fund, the Pensions Institute states.
Under the new pension scheme which includes auto-enrolment it is estimated that another eight million employees will get a DC pension provision. "These people will be particularly vulnerable to investment risk as they will be largely lower- to median-earners and will have little or no investment experience," Harrison commented.
The report can be found on http://www.pensions-institute.org/ .