£400m for victims of pension collapse

Details of a £400 million fund to assist workers denied pensions when their companies collapsed were unveiled by the Government today.

Ministers are hoping the multi-million pound package will avert a backbench rebellion when the Pensions Bill returns to the Commons next week.

Pensions minister Andrew Smith has been under pressure from unions and Labour backbenchers to come forward with a financial deal for the estimated 60,000 people who lost their occupational pensions despite being compelled to join company schemes. The fund of £400 million will be used to make phases payments over the next 20 years, said a ministry spokesman.

Downing Street said the fund was "very welcome news" which would "go some way to addressing the issue and problems that these people have faced".

The Prime Minister's official spokesman praised the "hard work done in a series of government departments", and TUC general secretary Brendan Barber called the package "an important victory for union campaigning". He also welcomed the work of ministers who had sought "a just deal".

But Mr Barber added: "This is not the only pensions issue. The retreat from good salary-related pensions continues, fewer people have any access to a pension at work and the state pension is not keeping up with earnings.

"Today's victory will spur unions to step up our campaign for a new pensions settlement."

The spokesman for the Department of Work and Pensions said the money was designed to offer assistancebut stressed: "It is not a compensation scheme."

Mr Smith said the Pensions Bill would establish a Pension Protection Plan to prevent workers losing out in the future.

"But the fund gives us cover for the future, and cannot help those who have already lost out," he said.

It is hoped the £400 million fund will be topped up with contributions from the pensions industry and "other stakeholders".

Labour whips had warned that without the deal the Government faced almost certain defeat in next Wednesday's crunch vote on the Pensions Bill.