Thrown to the Wolves

The Conservatives have indicated that if the PPF ever faces financial meltdown due to increasing claims on its purse, were they to be in power, they would not bail it out. Brave words from the sidelines, but I wonder whether in reality they would be willing to face the wrath of the ageing electorate by pulling the plug on it were (for arguments sake) BA and a few other big players hit turbulence.

The world has moved on since the days of passive resistance and genteel letters to the Times. The internet has provided a voice even for my generation of baby boomers and we are the ones most likely to be affected by any removal of the pension lifeboat however leaky it may be!! Action can be organised at the drop of an e mail!

But hold on…there is another side to the problem isn’t there? DB schemes are closing at an increasing rate and we are unlikely to see them coming back anytime soon if at all. The PPF depends on those schemes paying for its existence by way of the levies it imposes. The fewer the schemes paying levies, the more likely it is to fall over if the worst happens due to decreasing revenue. The PPF is, in effect, a large pension scheme, subject to the vagaries of the investment markets as much as any other scheme – only bigger. How can it protect itself from the risks it faces in a volatile environment? The phrase ‘between a rock and a hard place’ comes to mind here.

The current Government bailed out the banks to the tune of several billion pounds and a future Government might well say ‘enough is enough’. But surely the PPF would be a far worthier recipient of monies from the public purse than any risk taking culpable bank. Isn’t it?