Pensions review sparks criticism

Proposals will prioritise workers close to retirement

Plans to end "unfair" pension rules which can leave workers without a pension are up for consultation, the government has announced.

Hundreds of workers whose schemes have been wound-up voluntarily or because their firm has gone into liquidation have lost their life savings because of the existing pension rules, which give priority to retired members.

Existing workers can lose almost all of their savings, regardless of how long they have saved.

But the Liberal Democrats accused Labour of "complacency" after the government announced a further consultation on the issue.

Pension losses

Plans to change the rules were first mooted in the government's pension green paper last year.

Retired workers will still get priority under the proposals, because they have little chance of making up a pensions shortfall.

But the government plans to end the current system which treats all existing workers equally, and therefore penalises people who are close to retirement.

This announcement reeks of complacency Steve Webb, Liberal Democrats

The new system will take into account the length of time workers have contriubted into a pension scheme.

Malcolm Wicks, pensions minister, said: "At the moment, members who have not yet retired are ranked equally, regardless of the length of time in the pension scheme.

"It can mean that older people who have been in their schemes for many years are treated the same as those with just a few years membership, and we believe this is unfair."

The government's consultation will last until 3 December, and it expects to change the rules by early 2004.

'Complacency'

But Steve Webb MP, Liberal Democrat Shadow Work and Pensions Secretary, attacked the government over delays - and said it would do little to help those who had already lost out.

He said: "This announcement reeks of complacency. This much needed action was first proposed in last year's Green Paper.

"The government should be taking action not only on this issue but also compensating workers who have already lost their promised company pensions.

"The government continues to consult while pensions burn."