TPR has held talks with the insurance industry to seek to clarify how scheme members would be compensated in the event of an insurer being unable to meet its obligations.
The discussions have involved the Association of British Insurers, the Financial Services Authority and several insurance companies and have sought to establish whether the PPF or the Financial Services Compensation Scheme (the FSCS) would provide compensation for scheme members in the event of the collapse of an insurer with which benefits have been insured following a buy-in deal. Suggested approaches have included the publication of guidelines to clarify the issue, or the inclusion of a clause in buy-in policies stating how compensation would be paid.
Last year, insurers were involved in more than £2.6 billion in buy-in deals, providing pensions for thousands of individuals. One issue causing confusion is whether the £2000 compensation available from the FSCS would be paid only to the trustees of the affected scheme, or whether each member would receive this amount.
All parties involved in the discussion recognise that moves to clarify the issue will be welcomed by both trustees and scheme members.