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Last Updated: Wednesday, 18 April 2007, 11:37 GMT 12:37 UK
PM rejects further pension help
People protesting about their lost pensions.
There are calls for more compensation for those who lost their pensions
Prime Minister Tony Blair has rejected calls for more compensation to be given to people whose pension schemes collapsed between 1997 and 2005.

Tory leader David Cameron urged the Government to support an amendment to the Pensions Bill due for debate later.

Mr Cameron said it would help deal with "heart-breaking" cases of people who been left with little or nothing.

But Mr Blair said ministers feared an "unfunded commitment" that over time could amount to more than 2bn.

The prime minister said the "cruellest thing" would be to tell people "we can make that commitment and bail them out when it transpires we cannot".

The government has pledged a big expansion of the current Financial Assistance Scheme to help about 125,000 victims.

'Safety net'

Last month Gordon Brown announced its funding would be increased from 2bn to 8bn and it would cover everyone who lost all or part of their pensions between January 1997 and April 2005.

It will offer a financial "safety net" to approximately 125,000 people who were members of about 660 company pension schemes that were closed while insolvent, typically when the employer went bust, before 2005, when new protection came in.

Gordon Brown has doggedly refused to apologise for destroying people's pensions and security in retirement
Philip Hammond

But there has been criticism that the Financial Assistance Scheme is operating too slowly and that thousands of people who have applied for payments may have to wait years.

Plans to restore, after 2012, the link between earnings and pensions have been criticised as "too little, too late".

The Tories and Lib Dems are both supporting a "lifeboat fund" to offer immediate help, by topping up benefits to 90% of their expected pensions package at a cost of 600m.

Shadow chancellor George Osborne said it would be initially funded by a Treasury loan - and could eventually be paid off through unclaimed pensions assets.

Confidence motion

The call came after the chancellor comfortably saw off a Conservative motion of no confidence over his decision to scrap tax relief on pensions in 1997.

Shadow work and pensions secretary Philip Hammond said: "Gordon Brown has doggedly refused to apologise for destroying people's pensions and security in retirement.

He added: "Now we challenge him to back our proposal to launch a lifeboat fund to help the worst-hit pensioners by immediately topping up their income."

Those who have lost their pensions will not forgive MPs who do not back a fair compensation package
David Laws
Lib Dems

Last year Parliamentary Ombudsman Ann Abraham ruled the government was guilty of "maladministration", for failing to compensate the workers - but the government rejected her findings.

Tony Blair said taxpayers should not have to bail out private pension schemes - and the government could not take on a 15bn compensation bill.

"We simply cannot do that in circumstances where the reason for the loss is the collapse of those pensions schemes themselves," added Mr Blair.

But the Lib Dems say those who lost their occupational pensions deserve a "proper package" of compensation.

Work and pensions spokesman David Laws said: "This week MPs have their best opportunity to date to end this long-running farce. Those who have lost their pensions will not forgive MPs who do not back a fair compensation package."

The National Pensioner Convention has also written to all MPs and peers saying the Bill does not help Britain's 11m older people.

NPC general secretary Joe Harris said: "Pensioners are told to wait at least five years for the link with earnings to be restored, by which time three million of them will be dead.

He added: "For millions of pensioners, it will be too little, too late."

Labour leadership hopeful John McDonnell has also tabled amendments to restore the link immediately, end means testing and restrict increases in the retirement age.

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