Court decides against PPF for insolvent companies pensions

Fri, 13 Nov 2009

Employees of companies which attempt risky investment practices will not be able to receive a boost in their retirement income from the Pension Protection Fund (PPF).

The case was brought to the High Court by trustees of Ilford Imaging UK, which collapsed in 2004, to find out if the PPF would back them, however Mr Justice Henderson said that such a decision would "emasculate" the government fund.

Charlie Kirby, deputy editor for Pensions Week, commented on the news by saying that such constraints over funding are encouraging firms to close their final salary schemes .

" Pension funds will no longer be able to rely on the PPF as a lifeboat when deciding their asset allocation strategies, which means that trustees are likely to become more conservative in the choosing of investments in the future," he added.

Pension expert Dr Ros Altman recently claimed that defined benefit schemes could be rescued if the government backs a strategy to guarantee the PPF, ensuring employees have enough money when they retire.
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