Nearly 20% of schemes that have entered into the Pension Protection Fund (PPF) are failed Midlands based companies.
This is an over representation compared to the rest of the nation and this figure is likely to rise due to the looming closures of car and manufacturing production plants, according to Aon Consulting in Birmingham.
Matthew Harvey, pensions consultant at Aon Consulting Birmingham, said: “Unfortunately Midlands firms are over represented amongst schemes currently in the PPF. This comes down to the large number of automotive and manufacturing firms in this area who have traditionally offered final salary pension schemes to their employees. I fear we will see the Midlands being an even larger source of schemes in the PPF in the future.”
Pension schemes are eligible to enter the PPF, the government pension lifeboat, if the company attached to the scheme goes through a qualifying insolvency event and the assets held by the scheme are not sufficient to provide a minimum level of benefits promised.
Once a scheme enters the PPF, if members are not yet of retirement age they will only receive a pension of up to 90% of what they are entitled to under the scheme. This level could potentially reduce as more underfunded schemes require support.