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It has been revealed that up to 91% of final salary schemes cannot afford to pay out benefits, with the under-funded schemes carrying deficits of over £228 billion.
The PPF takes around £700 million from companies every year, but this has proved too little and doesn't cover its liabilities. The PPF has a deficit of around £550 million.
The PPF has already carried the weight of 62 schemes that failed, which include Woolworths, and Lehman Brothers.
There are now growing concerns that further failed schemes will result in the PPF to collapse, leaving future companies at risk of bankruptcy vulnerable to loss of employee pensions.
The government has been called on by The National Association of Pension Funds to back the scheme and act as a safety net, but the government has yet to comment.
NAPF Chief Executive, Joanne Segars, said: "In these exceptional times, maintaining confidence and security in pensions is vital so it would be a sensible measure for the Government to be the ultimate guarantor of the Pension Protection Fund."
Vince Cable, Treasury spokesman for the Party, said: "I get a very strong sense that this is the Titanic hitting the iceberg. It is potentially very vulnerable in a serious recession, which is what we are now getting into. Companies won't be able to sustain the fund in its present form. The Government has to be explicit that it is standing behind it."
The potential issues were raised after a new survey from Punter Southall revealed that 60% of pension schemes are unaware of how the recession is affecting their funding position.
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