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European Court of Justice rules Government’s pension protection inadequate

The European Court of Justice has ruled the Government’s protection for those who lost their pensions when schemes went bust was ‘inadequate’, but fell short of ordering compensation.
The case will now go back to the UK High Court which could then order compensation to the estimated 125,000 people who lost out when their occupational schemes were wound-up.
The outcome may also have a massive bearing on the Pension Protection Fund, raising the burden for UK firms by forcing the PPF to cover people retrospectively and deeming its current compensation limits of 90 per cent of lost pensions and a £26,000 cap illegal.
The case was brought by unions representing employees at Allied Steel and Wire and United Engineering Forgings and rested on whether the Government should have done more to protect the schemes under the 1983 EU Insolvency Directive.
The Court ruled that although the protection regime was inadequate it did not mean the Government had to compensate those who lost out.
Amicus general secretary Derek Simpson says: “This judgement vindicates our decision to take this case all the way to the ECJ. We have consistently said that we will defend our member’s rights on pensions and this case demonstrates that successive governments have failed workers who have heeded their advice to save for their retirement.
We are confident that when this case returns to the UK High Court, our arguments will be upheld and our members who, through no fault of their own, lost all or substantial parts of their pensions, will be fully reimbursed. It is also a vital judgement in restoring peoples faith in the pensions industry. In order to save sensible and throughout their working lives, people need to be reassured that their money is safe.”
Conservative Shadow Work and Pensions Secretary Philip Hammond says: “Gordon Brown has done untold damage to our pensions system over the last ten years. The Government has been found guilty of maladministration by the Ombudsman, now this judgment has declared the level of pension protection in the UK inadequate. Yet Gordon Brown still won’t listen.
The Government must show leadership in resolving this crisis. Conservatives have asked Gordon Brown to look at using unclaimed assets as additional funding, another plea ignored by the Chancellor.”

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