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No blame, no gain

I have said this before but I yield to no one in my admiration for Ros Altmann. Not only is she one of the most original thinkers around when it comes to analysing the future of retirement provision in the UK but she is also a dedicated campaigner – along with some journalists – on behalf of people left in the lurch by the wind-up of their occupational pension schemes over the past decade.

People such as Willie Riggins, a former employee at United Engineering Forgings, in Ayrshire. After 37 years at UEF and its previous incarnation, British Steel, Willie was told in June 2001 that the company was going into administration.

He had been expecting to retire on at least 130 a week, plus the basic state pension. His many years of work also entitled him to a lump sum of 30,000. Instead, Bill’s pension has shrunk to 40 per week while the lump sum will be worth just 12,000.

Some estimates suggest that up to 80,000 employees in the UK have had their pension dreams in tatters as the schemes they belonged to have been wound up.

Two years ago, after some determined campaigning, the Government finally responded to the plight of UEF workers and others by launching a 400m financial assistance scheme. The money will be paid out over 20 years. But as many experts, including Ros, have pointed out, this sum of money will only be enough to meet a fraction of potential claims from employees whose pension schemes have gone belly-up.

Yet the Government is ignoring these warnings, pretending that it is still not possible to quantify how far the money will go in meeting the needs of those who have lost out.

Clearly, it calculates that having bought off its own backbenchers with this sop to their conscience, they will not have the appetite to demand more money for those whose future has been destroyed. The evidence so far suggests that ministers have judged the Labour backbench mood correctly.

Which is why many people, including Ros, have looked to the Parliamentary Ombudsman, Ann Abraham, as the solution to their problems. Ms Abraham is being asked to rule on whether a key contributor to the plight of these workers was the Government itself or agencies for which it was responsible. Her report is expected any day now.

Campaigners have argued two key points – first, that over the years, the Govern- ment has repeatedly stressed the “guaranteed” no-risk aspect of occupational pension schemes, when this was patently not the case. In so doing, it served to wrongly reassure many workers that their company pensions were safe.

Second, it is being claimed that the Government further failed workers by failing to make changes to legislation in the 1995 Pensions Act. This was specifically drawn up in the aftermath of media tycoon Robert Maxwell’s raid on hi own companies’ pension schemes.

But it failed to close a number of key loopholes and, indeed, made matters worse in several cases, most notably on failing to deal adequately with the question of the minimum funding requirement.

Obviously, I hope the report does find in favour of those whose pensions have vanished and I do believe that the Government should offer some form of compensation to those who have lost out.

After all, it has also created a separate financial lifeboat, funded by pension scheme levies, to ensure that members of occupational schemes that may be wound up in future are not similarly affected. It would therefore be incredibly cruel if those affected today should miss out on compensation because of an accident of Parliamentary timing.

But I am not convinced that the Government’s and the regulator’s leaflets – both crude and containing inaccurate claims about the safety of occupational pension schemes – were fundamentally responsible for what happened.

Let us be brutally honest here – in all my 25 years as a member of various workplace schemes, during which time I was a trustee in one and for many years before that, a union rep with a special interest in pensions – I have yet to come across a single person who has ever joined or remained in a scheme because of anything they read from the Government or one of its departments.

The reality is that most normal people become members of a company pension scheme because they are dimly aware of the fact that they need to save for when they get old and that this is one useful way of doing so, especially if their employer is chipping in.

My worry is that by creating a false argument based on the degree to which the Government is to blame for what happened, campaigners are setting themselves up for a crushing disappointment if the ombudsman rules against their claim.

That would, ironically, make it much easier for ministers to convince their supine backbenchers that there is no need to pay any more compensation than the pittance now on offer.

A more determined, direct – and honest – campaign is needed in support of those who face losing most their pensions through no fault of their own. I would love to see Ros leading it.


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