The Conservatives were drawn into a row with the City yesterday as their plans to help people left without savings when retirement schemes collapse were denounced by the pensions industry.

In an unusual move, the trade body that represents insurance companies attacked the Tory plans as “robbing Peter to pay Paul”.

The Association of British Insurers, whose 400 members account for almost a fifth of London’s stock market investments, said that the Conservatives’ policy amounted to “another hit on pension funds”.

Tory MPs will vote in the Commons today for a pensions lifeboat scheme whereby 125,000 people who have lost some or all of their pensions would get extra compensation by taking unclaimed assets of pension companies.

In amendments to the Pensions Bill they say that a government agency should have powers to collect unclaimed assets from pension funds and use them to top-up payments to those left with little or no pensions.

But insurance companies said that customers who buy their own pension products would lose out as such unclaimed assets are used to boost returns for their own pension schemes.

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