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19th September 2017
:: Press Office | Press Releases | Savers safe, pensioners punished

Press Release
 
Savers safe, pensioners punished
 
   
Exactly what makes Northern Rock savers so special that the Government has stepped in with an open cheque book to guarantee their savings? And what message is the Government sending out to members of final salary schemes who lost their pensions as a result of their scheme winding up or their employer having gone bust leaving the scheme underfunded?
 
Northern Rock’s savers, more correctly referred to as depositors, are covered by the Financial Services Compensation Scheme which provides compensation in the event of a bank or building society collapse. Okay, so this is limited to 100% compensation on the first £2,000 and 90% compensation on the next £33,000 of deposits.
 
But pensioners are being treated differently. Since April 2005, members of failed company pension schemes have been covered by the Pension Protection Fund which provides compensation to qualifying members. Even then the compensation is limited where members have not reached their normal retirement date.
 
But an estimated 120,000 pensioners have lost all or significant amounts of their pensions because their employer collapsed or wound up their scheme before the Government introduced its pensions safety net. After an investigation by the Parliamentary Ombudsman recommended Government pay 100% compensation to scheme members, the Government responded by saying tax payers cannot be expected to shoulder the burden.
 
Mike Jones, director of pension education website MyCompanyPension.co.uk, says: “Employees were mislead by successive Governments into believing their pensions were guaranteed when they were not. What is so different with savers that the Government steps in with an unlimited guarantee? The Government was dragged kicking and screaming into launching the Financial Assistance Scheme (FAS) to help the tens of thousands of pension scheme members who had lost their pensions through no fault of their own and who were not covered by the Pension Protection Fund (PPF).”
 
“The FSCS is the poor relation of the PPF. Since it was set up over two years ago it has paid out less in compensation to workers and pensioners than it has spent on administration and has made payments to less than 2000 individuals. Nobody wants to see savers losing money. Losing confidence is bad enough, but I can’t help but feel that this is a real slap in the face for workers and pensioners who have fought hard to get compensation since their schemes failed.”
 
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Contact 
Mike Jones
MyCompanyPension.co.uk Ltd
PO Box 240
Telford
TF6 5YN
Tel: 0845 123 5670
Mobile: 07730 855 596
Fax: 0871 433 4662 
Email: mikejones@mycompanypension.co.uk
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Notes for editors: 
 
MyCompanyPension.co.uk provides pension education, information and communication for scheme members, trustees, sponsoring employers and advisers. The website presents facts and information. MyCompanyPension.co.uk does not give advice; does not sell pensions, life insurance products, investments or mortgages.
 
The Financial Assistance Scheme offers financial help to some people who have lost out on their pensions because their occupational pension scheme was under funded when it started to wind-up and their employer has been unable to make up the shortfall because it is insolvent or no longer exists.
 
The Pension Protection Fund was established to pay compensation to members of eligible defined benefit pension schemes, when there is a qualifying insolvency event in relation to the employer and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation.
 
The Financial Services Compensation Scheme (FSCS) is the UK's statutory fund of last resort for customers of authorised financial services firms. This means that FSCS can pay compensation if a firm is unable, or likely to be unable, to pay claims against it. FSCS is an independent body, set up under the Financial Services and Markets Act 2000 (FSMA).
 
 
 
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Savers safe, Pensioners punished
 
 
 
 
Release date:
18th September 2007

Article details:
Main article 386 words

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