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Pension Edge: Derek Simpson

A number of recent surveys have shown that the pension deficit black hole appears to be shrinking. The recovery has occurred as shares have rallied and employers have increased their contributions to make good pension shortfalls.

This is encouraging news for the future of occupational pension schemes. It demonstrates that pensions should be viewed over the long term and that employers should not make knee-jerk decisions about the future of their occupational schemes.

It also reflects the value that the best UK companies and employers place on their pension schemes as a means of attracting and retaining the best staff.

However, not all employers have been so far-sighted.

More than half of the final salary schemes that were once on offer have been closed by employers and replaced with less lucrative money purchase schemes, while all the evidence shows that declining confidence in the pensions industry has had a negative impact on the number of people saving for their retirement.

A recent survey undertaken by Amicus revealed that only 40% of the population had made any sort of pension provision. With an ageing population, it doesn&#39t take a genius to workout that this situation is not sustainable.

We believe compulsory pension contributions that compel employers and employees to make minimum pension contributions are required, to ensure people save enough for their retirement throughout their working lives.

The government also has to move to restore confidence in pensions. Experiences such as the emerging pensions crisis at Federal Mogul, which could result in the UK&#39s largest ever wind-up of an underfunded scheme, illustrate how vulnerable UK workers&#39 pensions are. And they cannot fail to damage even further the already shattered reputation of the industry.

As well as requiring people to make provision for themselves through state and company pension schemes, we believe the government has to make pensions safe. People need to know their money is protected and that schemes are reliable, if they can be expected to invest in them.

Simply by giving pensions equal legal status to pay, millions of people&#39s pensions could be safeguarded. Amicus has also been campaigning for pension protection, and for people&#39s confidence in pensions, to be boosted, by awarding employee pension trustees equal power to employer trustees, and by giving them greater representation on pension trustee boards.

The trade union lobby has achieved some concessions on this through the course of the new Pensions Bill, but we believe the industry&#39s reputation could have benefited from moves to promote and improve transparency, fairness and members&#39 involvement.

Giving employee representatives legal rights to consultation would prevent companies imposing changes to occupational schemes, while keeping schemes&#39 members in the dark.

Full pension consultation rights would force companies to treat their employee members as real partners, take notice of their concerns and come to some form of amicable agreement.

Our union has fought successfully to prevent detrimental changes to our members&#39 occupational schemes at Rolls Royce and at Rhodia. Amicus also successfully campaigned for a pension compensation scheme for people who lost all or substantial amounts of their pensions when their companies went into insolvency.

The government&#39s new Pension Protection Fund goes some way to ensure that in future, members cannot suffer the loss of their pension savings in the event of company failure. There is also a commitment to a new Financial Assistance Scheme, for those who have already lost all or part of their pensions due to their company going bust, such as our own members at companies such as UEF, Motherwell Bridge and Richards.

We still have concerns about how the scheme will be operated, and if the £400m set aside by the government will be sufficient to cover the cost of the claims.

However, at least we have established the principle that those people who have lost out through no fault of their own have to be compensated We will work together with the government and, if necessary, pursue our case in the European Court so that these people will be given what they are owed.

We at Amicus understand that our members&#39 main concerns are security of income and employment now, and their security provided by pensions in retirement.

We have campaigned successfully to prevent pension scheme changes that would have harmed our members&#39 pensions at Rolls Royce, Aviva, Smiths Industries and Rhodia, because we believe that people who have worked and contributed to their pensions all their lives deserve to know they will have a safe and comfortable retirement.

We will also be doing everything we can to make sure that the pensions of the 40,000 Turner and Newall employees, past and present, are saved.

Derek Simpson is general secretary of Amicus

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