Pension compensation confusion

By Paul Lewis
BBC Radio 4's Money Box

Mr Wicks could not say when payments would begin

The government "cannot say" when the £400 million compensation for lost company pensions will be paid, or exactly how much people will get.

Tens of thousands of people lost all or part of their pensions after their employers went bust, leaving their funds with inadequate resources to meet pension promises.

After a long campaign by workers - and threatened with defeat in Parliament - the government came forward with a compensation scheme on Friday.

We are hoping that the pensions industry will make a significant contribution Pensions Minister Malcolm Wicks

But when asked how much of the lost pensions would be met from the fund, Pensions Minister Malcolm Wicks admitted many of the details were unclear.

He said: "We cannot say that yet, partly because in addition to the £400 million from the taxpayer we are hoping that the pensions industry will make a significant contribution itself, because although it is not their fault these schemes went bust, it is in the interest of the pension industry to restore confidence in British pensions...

"So we cannot say yet what it will be, but it will be a very significant proportion of the pension rights that this group of workers have lost."

He added that it would be "far more substantial than" a third of their lost pension.

'Significant' level

The £400 million public subsidy will be paid over 20 years - an average of just £20 million a year - and will be reviewed after three years.

The minister was confident that it would provide a worthwhile replacement pension.

I am looking for 100% and anything less than that is unacceptable to me Willy Riggans, affected worker

He said: "We have not got a target but I want it to be a very, very significant level, and it will be a very significant level."

But that is unlikely to satisfy the campaigners. Willie Riggans, a worker from Ayr, told the programme:

"It was on government advice we joined the pension scheme. I paid for 100%. I am looking for a 100%. Anything less than that is unacceptable to me."

MONEY BOX BBC Radio 4's Money Box was broadcast on Saturday, 15 May, 2004 at 1204 BST. Programme information

They may also be angered by the delays in paying any money. Mr Wicks could not say when payments would begin. He said:

"I cannot say yet. We have got to work out the details. It is urgent and I am frustrated about it but we cannot go into that sort of detail."

One reason for the delay is the complexity of setting up the compensation fund.

Mr Wicks confirmed that it would take over all the remaining assets of the pension funds that were in difficulties. But that requires new government powers which it will not get until later this year.

BBC Radio 4's Money Box was broadcast on Saturday, 15 May, 2004, at 1204 BST.

The programme was repeated on Sunday, 16 May 2004, at 2102 BST.