UK - The Association of British Insurers (ABI) is misleading MPs about the effects of the cross-party Pensions Bill amendments to be passed by the House of Commons tomorrow, according to pensions campaigner Ros Altmann.

Altman, a London School of Economics governor and pensions expert, yesterday accused "the ABI and its members are trying to stop Parliament providing a fair settlement to victims of pension scheme wind-ups" by urging MPs to vote against Pension Bill amendments tomorrow.

"The claim that amendments would take money out of other people's pension funds or with-profits policies in order to pay for the increase in FAS [Financial Assistance Schemes] benefits is simply not correct," said Altmann.

But Alan Leaman, spokesman for the British insurance industry's trade association, replied in an interview with IPE today "[Altman] has misunderstood the nature of the debate".

The ABI has warned the FAS - set up in 2004 to help up to 125,000 workers who lost their final salary pensions savings when their company went bust - must be funded properly but not through life and pension fund assets.

The extra cost of increasing FAS payments to Pension Protection Fund (PPF) level is around £20m (€29.5m) a year on average for the next 50 years, according to the Government.

Leaman told IPE: "If you look at the amendments that were proposed, they gave unlimited powers to seize assets from people's savings.This could potentially be very damaging," he added.

Nonetheless, ABI welcomed the Assets Review, published today by Andrew Young of the Government Actuary's Department, presenting a series of proposals which are said to improve the financial position of £1.7bn in company pensions which have collapsed and subsequently fall under the remit of the government's FAS.

Calling it a "very helpful report", Leaman said: "The picture that emerged in the Young review moves the debate on and shows that it is possible to improve the situation for pensioners without damaging life and savings."

Among the findings set out, Young suggests buying annuities, then topped up by the Government, may not be the best use of assets when members reach retirement and has instead proposed the bulk purchase of annuities and pooling of assets in a single fund to give economies of scale and increase the income received by pensioners.
 
This is a concept the European Fund and Asset Management Association (EFAMA) is said to be looking into as Steffen Matthias, secretary general of EFAMA recently told IPE research is being conducted by Professor Bauer at Frankfurt University into the pension payout phase and income at retirement.
 
The Assets Review has also proposed the Treasury could raid the surplus life and pensions assets held by insurance companies, known as "inherited estates" and thought to be worth around £20bn, to which Altmann and Leaman both refer.

The Assets Review acknowledges part of the complexity of this subject is it is unclar what constitutes an "unclaimed pensions asset" and any move to try and seize such monies would be "strongly resisted by the insurance industry and/or their
stakeholders and/or policyholders", so the team will continue to review the position albeit indications are there would be "significant difficulties to surmount".
 
This would give the government "a number of complex legal and operational issues" and so far offers little evidence of providing much additional funding, according to Peter Hain, Secretary of State for Work and Pensions.
 
"We now have a solid evidence base as to the available funding - and it is clear that unclaimed defined benefit pension fund assets and orphan pension assets are not serious options," he said.
 
That said, Hain described the interim findings of the Young Review as "encouraging" and suggested the government might then be able to offer a 90% return of assets guarantee from the taxpayer compared with the current 80% if it were to implement proposals.

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