New hope for wind-up victims

THE Government will come under further pressure this week to allow workers hit by the wind-up of their company pension schemes to receive full retirement benefits.

Ros Altmann, an independent pensions adviser to Downing Street, will brief officials at the Department for Work and Pensions on a possible solution, following a campaign by Financial Mail. Altmann had a 'constructive' meeting with Work and Pensions Secretary Andrew Smith last Tuesday.

At present, when a company scheme is wound up - usually because the firm has gone bust - the trustees secure the payments for existing pensioners. But this often results in meagre pensions for those about to start retirement.

Workers at collapsed steel giant ASW in Cardiff and Sheerness, Kent, lost up to 70% of their promised pensions as a result of the wind-up of their scheme.

The Government is pressing ahead with legislation to ensure a fairer deal for future victims. But Altmann's proposal is designed to help workers such as those at ASW without the Government having to immediately find the money.

Under her plan, the assets of schemes put into wind-up would pay pensions, including those due as workers retire, as long as the money lasts.

Once the wound-up assets are exhausted, the Government would step in to meet any shortfall, which she estimates at about £60m a year.

Altmann told Financial Mail: 'My proposal would ensure that action can be taken that is relatively painless for the Government's finances.'

Yet some experts remain sceptical. Peter Tompkins, pensions partner at management consultancy PricewaterhouseCoopers, said the Government should not be encouraged to 'write postdated cheques'.