THE GOVERNMENT yesterday ruled out using taxpayers' money to prop up pension funds of failed companies as it published a wide-ranging consultation into reform of the rules governing occupational pension plans.
Alistair Darling, the Social Security Secretary, published an independent report outlining a range of options and called for the "widest possible debate". But he stopped short of outlining which proposals he favoured. "Getting it right, based on as wide a consensus as we can, is more important than rushing into legislation," he said.
There are 13 million pensioners or working members of company schemes. Mr Darling said one in seven schemes failed to meet current rules on adequate funding.
The review is aimed at updating existing rules introduced in 1997 to protect workers from unscrupulous employers following the Maxwell scandal.
At the centre is the Minimum Funding Requirement (MFR) which aims to ensure a company that goes bust can honour its commitments.
Yesterday's proposals include encouraging fund managers to invest more heavily in corporate bonds and setting up a central fund to bail out failed schemes.
The pensions industry welcomed a commitment to reform this complex issue. The Confederation of British Industry said current rules "impose high costs on employers and distort pension fund investment strategies". The National Association of Pension Funds said the MFR needed an "early and dramatic overhaul".
But some experts were disappointed ministers had not come up with firm proposals. Charles Young, a consultant at pensions advisors Towers Perrin, said: "We have had a system for three years that is not working well, we knew consultations were going on and you would have thought someone would have come up with some conclusions. …