The government's proposed insurance fund for pensions protection is flawed, the ABI warned yesterday.
The government plan will require solvent employers that choose to wind up a scheme to buy out the rights of members - making them liable for the estimated £250 billion deficit in pension funds.
An ABI spokeswoman told the FT.com: "We welcome improved protection, although we have reservations about whether the government's insurance scheme will prove viable. But there is nothing in the package that will get new money into pension schemes on the scale that is needed to stem the current decline."
Hazell Carr director Kenneth Donaldson criticised the plans for not having an underwriter in place for the insurance scheme.
Donaldson said: "The proposed insurance scheme will become yet another cost on top of the burden that pension schemes have become to some employers.
"The concept smacks of robbing Peter to pay Paul - any insurance scheme will hit healthy pension schemes - possibly hard. Besides, if you have a £25million hole in your scheme that doesn't vanish by taking out insurance.
"Furthermore, the Government is proposing to scrap the Minimum Funding Requirement but by introducing insurance this will in effect reintroduce an even stiffer funding standard by the back door."
