Up to 40,000 current and former workers of car parts maker Turner & Newall may lose part of their contributions to their company pension scheme.
Turner & Newall workers fear they could lose their pensions
On Thursday their pension pot was frozen by the administrators of its parent company Federal Mogul of the US.
Many are predicting that the scheme, which has a shortfall close to £875m, may be wound-up completely.
Federal Mogul sought Chapter 11 bankruptcy protection after T&N was brought down by asbestos claims.
Dr Ros Altmann, a pensions expert and government adviser, who has spoken to the trustees of the pension scheme, said the outlook could be bleak.
She said members who had not yet retired could get less than 40% of what they were expecting.
Workers who had already retired would probably continue receiving their pensions, but their payments may be frozen and not index-linked.
"Pensions are supposed to be deferred pay. This is money the workers were promised by the company at the end of their working lives and this is a situation where they might not get the money that they were promised," she told BBC Radio.
If the pension scheme is wound up it would be the biggest closure of its kind.
Tony Murphy of Amicus union said: "This is yet another example of how vulnerable UK workers are. Their pensions are not protected and their interests are the last priority in the event of administration."
A Pension Protection Fund is being created to protect workers' pensions from April 2005
A £400m financial assistance fund is being set up by the government for people who have already lost out
Parent company Federal Mogul, which runs plants in Manchester and Bradford among other locations around the UK, has been in chapter 11 bankruptcy protection since October 2001 after a series of asbestos-related lawsuits, and pension fund members fear they will not be able to plug the £875m gap in its funds if the firm goes bust.
Pension fund administrators had sought to protect the pension pot as the US company undergoes major restructuring, which administrators Kroll feared may have seen them close the fund completely.
But a spokesman for Kroll, Simon Freakley, said: "We wish to make it clear that the scheme is still open - it hasn't terminated nor is it currently subject to winding up - and we continue to hold discussions with all parties who have
an interest in the future of the pension scheme to consider what the next steps should be."
If the pension scheme is wound up, those affected will not be protected by a new Pension Protection Fund as this scheme will not start until April 2005.
The government has announced it is creating a £400m "financial assistance fund" for 60,000 workers who have already lost out.
However, it is not yet known which schemes will qualify.
Malcolm McLean, chief executive of the Pensions Advisory Service, told BBC News Online: "The details are very sketchy, and everything is still in the air. We don't know the full details of what it is going to cover and who it is going to cover."
The US & Europe are not affected, and it has happened here "because it can". The administrators have set up a separate account for the short term into which employees and company contributions will be paid. However, as a member of the T&N Pension Scheme, I signed a document allowing deductions to be made from my wages into the Scheme. Now my money is being paid into an account that I do not know where it is held, I do not know the account details, I do not know who is managing it, I do not know whether or when I can withdraw my money, and we only have the local MD's verbal assurances and 'belief' that it is 'ring fenced' and safe. We are attempting to get unequivocal and legal confirmation. At the moment, as a financial and legal layman, I question the legality of this move.
Employee, name supplied
This is indeed a sorry tale of incompetence by pension fund trustees and years of government neglect in safeguarding the rights of pensioners. Clearly the Maxwell case did not open the government's eyes widely enough as to what measures were needed to protect money contributed to company pension schemes. Currently I expect to get little or no pension from this fund to which I have contributed for many years. So, in answer, no I am not in the least reassured.
Name supplied, Bradford, UK
I am a deferred member of this pension scheme and feel devastated that my 26 years loyal service all seems for nothing. When I joined the scheme I had no choice as it was mandatory, now I feel cheated by the fat cats that now seem to run or should I say ruin these schemes.
Garry Larcombe, Chard, Somerset, England
I do feel terribly sorry for the workers of this company. I currently do not hold a pension with my current employer as there is shortfall there too and with the current climate concerning pensions, I think they are too unsafe and very unreliable.
David Gibson, Birmingham, UK
My heart goes out to workers who, after many years of hard work, end up with nothing. In this day and age it is a complete disgrace that situations such as this should arise - the government must step in and help workers who are left in such situations; to ignore them and pass the buck back to administrators is morally and ethically unacceptable.
David, Redditch, UK
It is truly amazing and extremely sad that situation such as this can happen. It is also amazing that the Trade Union movement which was set up to protect workers rights will at the drop of a hat strike for almost any trivial reason but have completely failed to address the pensions issues in their 100 year history.
The government need to take more responsibly. The £400 million they have offered to workers who have lost their entitlements will merely scratch the surface. Gordon Brown took many millions from pension schemes in 1997 by stopping them claiming tax credits on UK dividends. This went largely unnoticed by the UK public because most schemes were in surplus at the time but falling stock markets and longer life expectancy have led to these deficits. The pensions protection fund which will be introduced next year is based on a US design which basically went bust. It is no wonder that employers are moving towards money purchase schemes. Unions don't like them but at workers cannot lose their entitlements under them.
Elizabeth, Portsmouth, England
It is great tragedy for the workers to face such dilemma after years of work input in the company.
The government must step in and give security to these workers and any future victims.
Vinoo, London, UK
The more I think about these sorts of events the more I want to make provision for my retirement by other means. People need to be protected and pensions need to me meaningful.
Andy, Brighton, UK
It doesn't surprise me that half of UK workers do not have a pension plan. Why risk your money? If you do pay into a plan the money the worker has worked very hard for disappears down a large hole or in the pockets of bosses.
Paul Lapping, Coventry
This is a contemptible and pathetic situation. Legislate... there are countries where this problem does not exist, meaning it should not exist in Briton either! Politicians get cracking.
Don Crowley, Netherlands
I have been a paying member in the T&N pension scheme for 10 years, and have been kept virtually in the dark on how the fund is performing and being handled. I have had no reassurances from the Independent trustee or the Company about the future of the scheme, have found out more from the news or the web.
Kevin Staples, Taunton, England
Federal Mogul has an "Integrity Policy" that all employees must sign and adhere to. It includes the statements "We are a team first", "We respect, trust and help each other" and "We act with integrity". As this problem only affects the UK, and with the lack of interest from our US and European counterparts and the recent funding of the US pensions it now appears that some employees are more equal than others.
A once loyal employee, Manchester, UK
I must be of the age group that walked round with "mug" written on the forehead. Late 40s early 50s, mortgage nearly finished and a pension to help make retirement easier. Encouraged to take out endowment mortgages that are now showing shortfalls as they come to an end and now the future of the pension looking bleak. Like many ex-employees of Federal Mogul I was made redundant, advised to freeze my pension because you lose so much transferring, now it looks as if I may have lost it all. I have always encouraged my children to be independent and to make provision for the future, but what's the point. They may as well live off the state like so many others!
It is impossible to adequately express my anger and disgust at the way my contributions and future pension have been "stolen".
An employee, Manchester, UK
I worked for over 28 years for the Company and was sold the pension on the basis that it would deliver a pension related to the final salary on leaving the Company. Obviously when you are given promises that the Company Scheme is one of the best around you tend to take it. This was mis-selling at its worst. It is a sorry state of affairs when the Government seems to be taxing us to the hilt and then a Company that you were loyal to for such a long time pulls the rug from under your pension. Retirement is supposed to be a happy time of your life but not any more. What is going to be the future for the generations that follow us if this is allowed to go on?
Ray Wagstaffe, Rugby, UK
And the UK Government wonders why young people aren't bothering to save for their retirement.
Carl Downing, UK
My husband works for this company and after more than two decades of contributory (and loyal) service is currently working his 90 day compulsory redundancy notice period - redundancy that came with the promise of receiving his pension entitlement when he left.
The plug was pulled on pension entitlements last Friday but the compulsory redundancy programme was/is already well underway so some people have already worked their notice, they have left and are receiving their pension entitlements and will continue to do so.
Those that the company wanted to keep - those who were needed to make sure the company met its obligations for transfer of the business abroad - will now suffer this financial discrimination and not only have their pension entitlements deferred but also face the prospect of losing up to 60% if not all of its value.
If it isn't illegal, it is certainly immoral and Federal Mogul should be forced to honour the promises made within the compulsory redundancy agreement - or pay compensation.
When the news was first announced, I was like my colleagues, dismayed, completely dejected, devastated and then angered. My 28 years of contributions count for nothing. Being moved from an active member to a deferred pensioner, it appears I have no appeal, no support, and few legal rights. To say that I feel cheated, robbed and ravaged is an understatement.
After 28 years of contributions and service, I was looking forward to retiring at 65 with a company pension. Now I face ruin and poverty. Being within a Company pension scheme, I was contracted out of the state pension scheme. Consequently I can now expect to receive a much-reduced state pension and no company pension. I would have been better off saving for my retirement by storing the cash under the mattress.
The administrator, the trustees, Federal-Mogul and the UK government have all completely failed to protect the employees.
Employee, name withheld
What beats me is why workers in this situation do not protest much more forcefully, like marching on Downing Street. They seem to meekly accept that "the establishment" is impossible to confront. If only they kicked up a really noisy fuss, like pensioners did over the council tax, they may actually get the Government to sit up and take notice, especially in the run-up to the party conferences and the next election.
Mike Mitchell, High Wycombe, UK
My husband worked for 40 years for a company whose scheme went into wind up he has lost all of his pension. We have found support from WWW.pensionstheft.org who are campaigning very hard to get justice from the government. Please join and help. Dr Ros Altman is our champion and she advises the government on what they should be doing to help. The group is asking members to contact their MPs and ask them to write to the ombudsman. It is only by joining this group that we can get the government to face up to their responsibilities. So far they say they are reluctant to increase the £400 million of tax payers money but they are happy to take tax payers money to build their own pension funds and those of the public service personnel.
l Ward, Stoke-on-Trent
Pension schemes should have first call on any funds before any other creditors and any payments to directors should be frozen pending action from the pension schemes. It's always the employees who suffer and they are then forced to become a burden on the state. So, the state should pass laws to protect them before any financial failing.
D A James, Lewes.
I started in the Associated Engineering Pension which was a good scheme They were taken over by T&N which seemed to be alright until recently when they got into financial trouble. Unfortunately they are not the only company to be in the same situation.
V P O'Donnell, Bournemouth Dorset
Why can pension contributions not be "ring fenced " from company assets and afforded the same protection as "client money" is within the financial industry .The continuous talk of compensation schemes being set-up and government looking into ways of avoiding these situations could surely be circumvented by a simple "hands off" for any money paid into a company pension fund by or on behalf of an employee.
This is yet another example of the disgraceful way in which British workers are treated by U.S. owned companies. We need legislation now to prevent such atrocities. What amazes me is the fact that the current "pensions crisis" where we are likely to have to work until we are 70 plus is not being challenged. Why do we have a crisis at all? There may be less workers in the future to contribute but there is no suggestion that company profits will reduce. How long are we all going to put up with this state of affairs?
Dave Neath, Bury, England