The financial services sector has been fleecing retirement funds for years but should not be allowed to use this product to continue the practice nor employers to cover up lack of cash

Pension funds have found a new way to fritter away the cash saved by workers. It is called liability insurance.

Every pension conference is dominated by the subject. Employers with final salary-scheme guarantees, and large deficits to match, will grab at almost any product that promises to make the problem disappear.

It involves buying derivatives, swaps and hedging investments at vast expense to offset any shocks from poor investment returns or future increases in life expectancy, inflation and interest rates. All the big investment banks and their advisers are queuing up to persuade pension funds to buy these insurance products. Conference delegates, under orders from their finance directors, listen intently during sessions on "how to de-risk your fund". Outsourcing all or part of the fund to an insurance company, often at vast expense, is another option.

Earlier this week the government's lifeboat fund, which rescues bust company schemes, said it preferred a slightly different strategy. The Pension Protection Fund, which is expected to double the amount of assets it manages to £10bn, once the current crop of bust companies are admitted to its scheme, will keep a buffer fund, or separate savings pot, to cover risk, rather than pay for expensive insurance – like someone who buys new kitchen appliances and refuses to pay for extended warranties. That's not across the board. It will hedge some risks, but refuses to go down the route of calculating all risks and insuring against them.

The financial services industry has fleeced retirement funds of their cash for years with exorbitant broking and transaction fees and extortionate management charges. It cannot be allowed to repeat the trick with insurance.

During a drive to end state extravagance, it has been discovered that millions of euros have been paid to deceased pensioners

Greece's fabled culture of honouring the dead has reached new heights with the discovery that the debt-choked country paid hundreds of deceased pensioners retirement payments for decades.

Under unprecedented pressure to cut spending and replenish empty state coffers, the socialist government announced it would be putting a stop to the seemingly impossible: dead centenarians receiving handouts.

"We are obliged to announce that some people in this country have been drawing pensions, though they may have died years ago," said Deputy Labour Minister George Koutroumanis.

Hundreds of millions of euros are thought to have been unwittingly wasted in payments that were dutifully deposited into bank accounts every month. Of the 500 recipients, aged over 110, more than 300 had died in the past seven years.

"One pension, for example, was paid to someone who had died in 1999," said Koutroumanis.

The crackdown, part of a historic drive to end state extravagance, will probably save the public sector up to ¤100m (£82m) a year. Although most of the handouts had lain idle in banks, some had continued to be claimed by fraudulent relatives.

After narrowly averting bankrupcty earlier this year, Greece has promised fellow eurozone nations and the IMF – the providers of up to ¤110bn in emergency loans – it will clean up its act.

Furious efforts are now underway to compile a pensioner registry.

Prime Minister George Papandreou's government, which recently completed the first ever census of civil servants, admits it has no idea of the real number of public employees.

The discovery of dead Greeks claiming pensions emerged as the ruling socialists attempted to clamp down on profligate practices, starting with chaotic account keeping.

In addition to bogus pensions, billions of euros are believed to have been lost within a leaky state system riddled with scams such as fake jobs, forged health prescriptions and fraudulent government spending in the form of supplies to hospitals and state organisations.