Because of the danger that employees might lose their pensions if the schemes they had been contributing to ran out of funds, the Pension Protection Fund works by monitoring those pension funds which are likely to become insolvent. In order to enter the Pension Protection Fund, the pension scheme must be assessed for a period of one year, during what is known as the pension protection fund assessment, or PPF assessment. Either the scheme will be found to have sufficient assets left so as to be able to give members a reasonable return on their pension contributions, in which case the scheme can be left in the hands of independent trustees to be wound up, or the funds left over to be divided between members will fall below a specific amount.

Should the level of return which the scheme can make to members be less than that provided by the protection fund, the Board of the protection fund will assume responsibility for providing benefits to the members of the scheme. The benefits payable are related to retirement age, such that employees over the retirement age of 65 will receive the full amount of their pension, whereas those under retirement age are likely to receive a lower percentage, at a rate which is capped.

Although it may seem as though employers can rely on the ‘safety net’ of the Pension Protection Fund, the legislation deliberately guards against any such incentive by stipulating that employers must make compulsory contributions to pension schemes. The lower the contributions an employer makes to its scheme, the higher the premiums due to be paid into the protection fund.

From the point of view of individuals paying into pension funds, even though the protection scheme cannot provide full compensation for the value of a policy it does protect contributions up to a considerable value.

If the pension fund in question began to wind up between 1 January 1997 and 5 April 2005 the applicable ‘safety net’ scheme would be the Financial Assistance Scheme. This is administered by the Pension Protection Fund, and operated in much the same way, but is for schemes which began to be wound up before the PPF model was brought in by Parliament in 2005. Again, in cases where there was not enough money to pay members’ benefits, such that a pension fund became underfunded, or where the company in question became insolvent, compensation is paid through the Financial Assistance Scheme by way of compensating those who would otherwise have made contributions for no return.

With any luck if you are in a pension plan either personally or through your company, if it has been running long enough you might just fulfill your ambitions of having a comfortable retirement, but that will not be the case for the majority.

As a race us Brits have long looked at the property we own as something to be passed on to our children when we die, but with recent events more people are looking at using their property to subsidise their own life after retirement from work.

Safe Home Income Plans (SHIP) is the UK trade body for Equity Release product providers and they have been lobbying and campaigning for more acceptance of their products in the financial market place for some time following adverse publicity towards the product in its early form.

Things have certainly moved on and with the current market unlikely to fulfill our pension dreams, equity release does offer an alternative form of funding our retirement to avoid this period in our lives becoming a complete nightmare.

In the third quarter of 2010, SHIP have reported a 4% growth in sales from their providers, the largest quarter on quarter growth since 2008.

Andrea Rozario, Director General of SHIP said:

“The equity release market has returned to growth with the largest quarter on quarter increase since mid-2008.   The financial services industry has had a tough couple of years and this move clearly illustrates increased customer demand.    It also shows that the work undertaken by SHIP – and its members – to increase the wider acceptance of this product range is having an impact.

“It is interesting to note the swing from lump sum mortgages being the most popular product to drawdown dominating the market.  This reflects the change in the type and number of providers as well as consumers attitudes to borrowing.  With the current economic turmoil and resulting consumer uncertainty, many consumers favour drawdown mortgages which allow them to gradually access the equity in their homes.  The sales of reversion mortgages have also increased.

“This quarter’s figures provide us with a strong platform for growth in the remainder of 2010 and a firm foundation on which to expand the market in 2011.   In addition, the cuts announced in the recent spending review will hit all sectors of the population and may lead to more people seriously considering equity release.”

The deal will see Tesco selling fifteen of its stores and two of its distribution centres to a 50-50 joint venture company owned by Tesco and the unnamed pension fund.

All properties will be leased back to the joint venture on 30-year RPI-linked leases, with an average initial yield of 5.2% for the stores and 6.3% for the distribution centres.

The deal is  the latest phase in the firms ongoing programme to release value from its property portfolio – a programme that was started in 2006 and now with a transaction value of £3 billion. It aims to keep 70% of its properties on a freehold basis, a level that is maintained through new store openings.

The government has said that the former directors known as the ‘Phoenix Four‘ plus chief executive Kevin Howe, may be banned from running other companies.

Despite the fraudulent claims the Serious Fraud Office does not intend to pursue a criminal investigation into the collapse of the company that saw 6,500 lose their jobs.

The full report on the scandal is contained in an 830 page document and although the financial remuneration is at the centre of the report it also publishes the following findings:

• Mr Beale bought software to “clean” data from his personal computer, a day after investigators were appointed, “despite being aware that we would want to image and then review the contents of his computer for documents relevant to our investigation”.

• Mr Stephenson paid more than £1.6m to a consultant he had a “personal relationship” with.

• Executives had exaggerated in statements to MPs the personal financial risks they were taking.

• There was evidence of a questionable briefing to the press by an adviser to former Trade Secretary Patricia Hewitt.

The former directors have hit back at the claims calling the report a witch hunt and government whitewash. They issued a joint statement to deny any wrong doing and added:

“Our remuneration was not the reason for the collapse. The real reason is the government bungled the last chance to save MG Rover,” said Mr Howe, chairman John Towers, ex-vice-chairman Nick Stephenson, Peter Beale and John Edwards.

I can’t really understand how an apology is going to help anything, 6,500 have lost their jobs and five executives walk away with forty two million between them. It was bad enough watching Fred Goodwin smiling his smarmy way out of RBS after making sure that he was set up for life, can the government just stand by and watch again?

One third of small business owners considering selling their businesses agree that the state of the UK economy has severely affected interested parties; with 20% suggesting the selling price had fallen, leaving them with little option but to continue working for longer.

Even those fortunate enough to have found a buyer and sold their businesses are finding harder times in retirement.  A staggering 80% suggested the value of their pension fund had fallen since Labour came to power in 1997.  More than one third suggested they would possibly set up another business to help manage financially.

Approximately 80% of those questioned believed the Government had failed to recognise the importance of small owner-managed businesses and the importance it plays in the UK economy, and blamed the Labour Government for economic mismanagement.

As a small business owner-manager myself, I strongly feel down trodden by both the Government and by the banking industry.