Drake Insurance's employees have been told its pension fund's shortfall has risen to £350,000 and the government will not bail them out.
Pension fund members were sent a letter from Colin Marsh, the pension trustee, two weeks ago explaining the fund shortfall had jumped from £153,000 last September to £350,000 this year.
“The shortfall has been caused mainly because the contributions from the liquidators has dropped. The number of members has fallen and the liquidators are only contributing for the remaining staff members of Drake,” said Marsh.
He stressed “no misappropriation of funds had taken place” in regard to the fund.
However, the pension ombudsman, the Pension Compensation Board (PCB), which was established to cover company pension funds after insolvency or in cases of fraud, has rejected the fund's claim for compensation to redress the shortfall. According to the letter, a “technicality” has meant the PCB will not pay out.
Under the board's ruling, Drake went into liquidation, not insolvency, so is exempt from compensation.
A Drake pension policyholder said: “This is not really fair, expecially after the government pledged to make a difference after the Maxwell case.”
He also said the liquidators were “dragging their feet” over assessing a proper transfer value.
“I understand that they must make a balanced value because it will impact on the other members, but we need closure and I just want to move on.”
Marsh said the Drake pension fund was valued at £5m and, as a guaranteed benefit fund, all remaining members will be paid in full.
