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More sponsors to become insolvent over UK pension schemes

Cass Business School Pensions Institute has reported that a significant number of sponsor businesses could become insolvent by ‘stressed’ pension schemes.

1,000 schemes could end up being move to the Pension Protection Fund, an organisation that helps people get their pension back if sponsors become insolvent. Low interest rates and low gilt yields have contributed to financial problems.

Director of the Pensions Institute, Professor David Blake said, “Government policy is predicated on the assumption that employers with DB schemes, over time, will be strong and prosperous enough to pay benefits in full. The report challenges this rose-tinted view.”

The report reveals many schemes could be saved if the current pension scheme regulations are revised and are calling upon the government to address the issue. A limit on pension increases is one idea to help improve the situation.