Allied Steel and Wire went into receivership in 2002, with some members at risk of only getting a fraction of their pension before the introduction of the Pension Protection Fund.
Now we have the BHS, Tata and Halcrow headlines in 2016, with calls for someone to do something and a raft of suggestions for radical changes as a kneejerk reaction.
The Pensions Regulator has helped to drive funding levels upwards, and the PPF gives an invaluable safety net for schemes still falling short of that threshold
That said, the Halcrow scheme seems to have enough money available to stay out of the PPF and pay people their full pensions, except for future increases.
The trustee of the British Steel Pension Scheme confidently asserts that their funding is good enough to beat PPF benefits with a change to pension indexation and may be able to provide full benefits over time.
Even members of the BHS Pension Scheme can rely on the PPF to provide at least 90 per cent of their entitlement (albeit again without full pension increases) and may get more if Sir Philip Green does somehow manage to fix the funding problem.
Not all bad news
Obviously it is horrible for people to lose any pension they were expecting, especially for those who have already retired and can’t realistically go back to work to make up the shortfall.
However, the Pensions Regulator has helped to drive funding levels upwards since its creation in 2005, and the PPF gives an invaluable safety net for schemes that are still falling short of that threshold.
BHS did not pay any dividends since 2004, disclosed a pension surplus in 2008 and doubled employer contributions after the last actuarial valuation. None of that means the trustees could afford a full buyout of benefits when the company went bust, but neither does this failure mean the system is broken.
We are not completely out of the woods yet and there are still schemes at risk, but employers continue to pay significant sums to fund deficits and many schemes have been able to reduce risk over the past few years.
Any changes we make to the system should therefore be considered calmly.
Hugh Nolan is president of the Society of Pension Professionals and director at Spence and Partners
