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Govt decision &#39will halve income for 1,400 Maxwell pensioners&#39

A row is erupting over the Government&#39s refusal to refund a £30m surplus to one of the Maxwell pension funds, meaning the pension income of 1,400 members of a sister scheme may have to be halved.

Law Debenture, the trustee of the Maxwell Communication Pension Plan – one of the schemes plundered by the late media mogul Robert Maxwell – claims a £40m black hole in the scheme should be plugged with the surplus from the healthier Works scheme, rather than it being retained by the Government to repay deferred National Insurance contributions as part of an agreement in 1992.

The trustee says the Department for Work and Pensions is acting against the spirit of a compromise brokered by former Conservative Social Security Secretary Peter Lilley.

But the DWP says the scheme should stick to the agreement it signed in 1992 and claims it is only in deficit because of poor investment decisions made by the trustee.

A DWP spokeswoman says: “It is the trustee&#39s fault rather than ours. The pension fund&#39s investments have not paid off. The Government cannot set a precedent by compensating people with poor performance.”

However, the trustee insists it adopted a cautious investment strategy.Pensions director Eddie Thomas says: “We absolutely refute the Government&#39s accusation. We followed a prudent and cautious investment policy, putting 70 per cent in bonds and 30 per cent tracking the index.”

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