Most people involved in pensions probably understand the risks of leaving the EU.
The risks to our economy, to future jobs and growth, to our national security are all significant and the uncertainty that would result from a vote to leave would undoubtedly unsettle financial markets.
That means pensions would be hit too.
But I think it is also important for the public to understand the advantages of being in the EU. The European Union has helped ensure better protection for people’s pensions where relying on British law failed.
A big benefit of the EU is its protection of workers’ rights.
Back in 2000, I worked at the Treasury on the Myners Review of Institutional Investment and discovered that the so-called Minimum Funding Requirement for UK defined benefit pension funds was not working properly.
I wrote about it and gave speeches about it to the pensions industry, warning that the MFR did not properly protect workers’ pensions if their scheme collapsed.
Three things were particularly dreadful about this.
Firstly, the Government had itself assured pension scheme members that their pensions were completely safe and protected by law after the Maxwell debacle – yet this was not actually true.
Secondly, in those days, workers were not allowed to have any other pension savings. If you were in your employer’s pension scheme then all your own pension savings (additional voluntary contributions) had to be put in there too, so members’ entire life savings were often in their pension fund.
Thirdly, as most of these pension schemes were contracted out of the state pension, some of the members’ state pension was in their employer scheme too.
The reality was that the MFR did not ensure there was enough money in UK pension schemes to pay all members’ pensions. UK law said all the money in the pension scheme must first buy annuities for pensioners, including full inflation-linking – even if those ‘pensioners’ were actually top directors in their 50s who’d taken ‘early retirement’ to secure their own position at the expense of their loyal workforce before putting the pension scheme into wind-up.
Workers who were just a week away from retirement could lose everything if there was no money left after buying pensioners’ annuities.
Which is precisely what started happening.
After the dotcom crash, pension schemes like Allied Steel and Wire started failing. I met devastated workers in their 60s who had believed the Government promises of protection, trusted that British law had looked after their pensions as promised and suddenly found they were left penniless for the rest of their lives.
Having moved from the Treasury over to work with the Number 10 Policy Unit, I tried to help the Government see it had to remedy this situation. I helped lead a campaign with these ‘stripped’ pensioners, together with MPs and unions, to get the law changed.
After a couple of years, we got the Pension Protection Fund established and a major reason for achieving that relatively quickly was that the UK had failed to meet the EU protection requirements.
Article 8 of the EU Insolvency Directive requires member states to properly protect workers’ pensions. Britain had said the MFR would do this, but that was not true.
I recognised then that we were fortunate to have the added layer of protection provided by the EU.
Europe is good at protecting workers’ rights and I am delighted that these workers, who faced a retirement in penury, are now protected thanks in part to the protections of being in the EU.
It is important to recognise that there are benefits of being part of a larger club and, in our increasingly globalised world, dominated by countries the size of continents, being a gateway to a 500 million person market gives us far more power and protection than going it alone.
I fervently hope we won’t throw that all away.
Ros Altmann is pensions minister