A new pensions scandal could once again leave thousands of British pensioners stripped of their pensions. There are serious flaws in the 2004 Pension Act and immediate action is needed from the Government to prevent scheme members from losing their pensions.
The George and Harding pension scheme is being refused entry to the Pension Protection Fund. Conor Burns, MP for Bournemouth West, whose constituent Colin Harding is chair of the trustees of the G&H scheme, arranged a meeting with the pensions minister to try to get the DWP to deal with this problem. But while offering interest and sympathy with the case, no solution has been put forward. Action is needed now.
The latest scandal involves the small G&H scheme with only about 40 members. But that is exactly how the last problem started.
Following Robert Maxwell’s death in 1992, he was found to have plundered the Mirror Group pension scheme, leaving members’ pensions in tatters. In 1995, laws were introduced promising final-salary pension scheme members that their pensions would be safe in future. But when these assurances turned out to be false due to flaws in that legislation, 140,000 people lost some or all of their pensions.
Their plight turned into a many-year campaign to persuade the Government to take action, during which time many of those affected died without ever having their
After years of pressure, the Pension Protection Fund was set up to make sure anyone paying into a final-salary scheme would never again suffer such unexpected pension losses.
The new laws meant that members were led to believe no one could lose their pensions in future when their employer failed. This turns out not to be true.
Members of the G&H scheme, whose company had been paying all scheme contributions and levies to the pension fund as required, have suddenly found they have no actual protection because of a legal technicality.
Now the PPF has refused to cover their pension losses following the failure of the sponsor.
In fact, the PPF has merely offered to return the PPF levy payments to the trustees, leaving the scheme members high and dry. The scheme does not have enough money to meet its commitments to pensioners or those not yet retired and pensioners face losing half their pensions.
The problem appears to be caused by the legal definition of the word “employer” under the terms of the PPF legislation. Although the sponsoring employer has been paying contributions to the scheme, all scheme expenses and the PPF levy, it turns out the law does not consider it to be a “statutory” employer under the required legal definition.
This loophole must be closed and closed now before more schemes suffer the same fate. Thousands of people could potentially be exposed to it.
Dr Ros Altmann