Predictions that the UK’s new Pension Protection Fund would be swamped with applications and rapidly become insolvent have failed to materialise, says fund chairman Lawrence Churchill.
“Predictions that we’d be insolvent have failed to materialise,” Churchill said. He was speaking on the fringes of a conference organised by the Association of British Insurers.
Analysts and academics have questioned the viability of the PPF. There have been expectations that companies such as failed engineering firm Turner & Newall and car maker MG Rover, which is in administration, would dump large pension liabilities onto the fund at the outset.
A PPF spokesman said that it by end of last month it had so far received just three initial applications from companies: MG Rover – as well as the lesser-known Bristol Community Sport Ltd and Pearce Signs Group.
“We are assessing these notices,” he said. He added the PPF has 28 days from receiving the so-called Section 120 notices before they go into an assessment period, which could take up to a year.
Meanwhile, the ABI has published a report comparing pension schemes in other countries called ‘UK Pension Reform: Lessons from Abroad’.
It concludes that while no single country has a pension system that is either perfect or suitable for copying wholesale, each can offer some useful lessons for the UK.
Stephen Sklaroff, deputy director general, said: "There are useful lessons to be learned for us in Britain as we contemplate reform of our own pensions system. No country can afford to ignore potentially useful ideas, wherever they may come from.“
Nigel Peaple, ABI policy adviser, added: “No one country has a perfect pensions system and, indeed, each faces different challenges in addressing their own specific pension problems. However, our research has identified five lessons for UK policymakers which they may find of use as they consider how to close the savings gap.
Those lessons included the realisation that there is no ‘one-size-fits-all’. Pension arrangements needed to be tailor-made and human psychology could be harnessed to make voluntarism work.
Other findings were that compulsion is not as simple or as efficient as it might seem and that an effective pension regime needs a sound state pension at its core.