UK – Former UK social security minister Frank Field is to table a bill in parliament that would offer better protection for pensioners when schemes are wound up.
How the payments are divided would depend on length of contribution rather than the status of the pensioners, whether deferred pensioners or pensioners.
The bill will also propose a national insurance scheme which will pay 90% of the difference between what was expected and the money available.
Field, who is chairman of the Pension Reform Group and a critic of the government, plans to introduce the bill on Friday March 7 and has written to Iain Duncan Smith, leader of the opposition Conservative Party, to ask if he will use one of his so-called Supply Days to introduce the bill.
“The government has to come forward within six months with a national scheme of insurance,” he told the Pensions in Crisis conference in London.
“There is going to be a large number of people who are going to see what they thought was their pension promise snatched from them and devalued very significantly.”
Filed is also asking the Department of Trade and Industry to investigate cases where banks have pressed for early closure of final salary schemes.
“Closures in future will be so large will be so large that the insurance scheme will need borrowing powers from the government,” Field said.
Dawid Konotey-Ahulu, a managing director at Merrill Lynch, said that raising the pecking order of pensioners would have an impact on pension funds. “You can see immediately what the effects would be if you are a bond holder and you have a rival creditor – that’s going to be a negative effect.”