The Government has agreed to pay £400m to workers who have lost some or all their pensions in collapsed occupational schemes.
Work and Pensions Secretary Andrew Smith says the money will help victims of the occupational pension debacle which has seen about 60,000 workers lose pension benefits. Industry experts say the money, which works out at £6,666 a head, will not meet all workers' losses although the DWP hopes that the financial services industry will contribute.
The Government has avoided using the word “compensation” but the cash – to be paid over 20 years – is seen as an acknowledgement by the Government that it was to some extent responsible for failing to protect workers' pensions.
It had been facing its first defeat over a major piece of legislation in the House of Commons after more than 200 Labour MPs agreed to support an amendment to the Pensions Bill calling for compensation.
The DWP is conducting detailed research into how many people are affected and will consult on how assistance will be delivered.
Details of the fund's operation will then be worked out and the operation will be reviewed in three years.
No decision has yet been made as to whether the payments will be administered by the Pension Protection Fund or by another body.
Smith says: “This will give real help to people who have lost their life savings through no fault of their own. I have met many of those affected and I am convinced that taking action is the right thing to do. It will also be a huge boost to wider confidence in pensions.”