Legal action threat over pensions

The ASW plant was shut down last year

A UK steelworkers' union is threatening to sue the government over the collapse of a Welsh steel company that left hundreds of its pension holders with nothing.

The union has said it will sue if the government fails to accept "the moral and legal case" for paying compensation to former ASW workers.

In early June the government announced that in future company scheme members would be protected by a new insurance, the pension protection plan.

But the government has so far refused to allow the pension protection plan to pay workers retrospectively.

The ISTC union says the UK Government has ignored a provision in the 1980 EU insolvency directive which protected employee pensions if their employer went bust.

National debate

Eight hundred workers were made redundant when ASW went into receivership in July 2002.

We are fully prepared to take legal action against the Government on our members behalf

Michael Leahy, General Secretary of ISTC

They lost 90% of the value of their occupational pensions as the company went under, many after decades of paying into the fund.

The ASW case triggered a national debate about the safety of company pension schemes.

Under new pension rules, schemes are to be forced to pay into the new pension protection fund an insurance to protect 90% of the value of current workers' pensions and the full value of retired members.

At the time of the government announcement ASW workers were furious that the new scheme would not aid them in their plight.

Floodgates opened?

But the union has now employed legal council to look into the allegation that the Thatcher government of the early 1980s failed adequately to implement the 1980 directive, which required them to introduce by 1983 measures to protect employees from losing their pensions if their employer became insolvent.

If the union wins a case it could open the floodgates for similar claims against the government.

"We hope that we can reach agreement with the government so that ISTC members at ASW have their pension entitlements restored," said Michael Leahy, general secretary of the ISTC.

"If we cannot, then we are fully prepared to take legal action against the government on our members behalf."