Pension protection rule change urged

ASW workers lost their pensions with their jobs

Urgent interim measures to protect workers pension rights are being called for by the Conservatives in the light of recent company collapses.

Hundreds of former ASW workers in Cardiff and Sheerness, Kent, are likely to receive just one third of their final salary pensions, while some are still uncertain if they will receive anything at all.

Tory Shadow Minister for Work and Pensions Oliver Heald announced on Monday new proposals to protect workers left exposed by the collapse of their companies.

Oliver Heald: 'Insufficient protection'

The Department of Work and Pensions has said its forthcoming Green Paper sets out the basis of discussion of whether the level of pension protection in the UK is appropriate.

Mr Heald has tabled an Early Day Motion in parliament for an emergency change in the pension rules to ring-fence final salary funds.

The move would guarantee pension payouts with priority to those employees who were within 10 years of retirement.

ASW's Castle Works site closed this summer with the loss of nearly 1,000 jobs. Celsa, a new Spanish buyer for the works, has been found.

It is not acceptable for workers...to end up with next to nothing because their pension scheme folds.

Oliver Heald, Tory shadow pensions minister

But it remains uncertain how many former workers could be re-employed. And the buyer is very unlikely to pick up the bill for the pension scheme.

Plaid Cymru MP Adam Price is pursuing a little-known 1982 European Union directive, which underlines the UK government's role in protecting pensions, which could aid the ASW workers' case.

In October, the National Association of Pension Funds published its report on the issue, Pensions Plain and Simple.

The proposals outline priority to pensions in payment up to 90% of their current level.

The next level would be pensions of those who are expected to retire in the next 10 years up to 75% of their entitlement.

Then other pension members would receive up to the level of their paid contributions paid.

Worker priority

Mr Heald said urgent action was required to protect long-serving workers.

"The present protection is insufficient and has actually resulted in more and more people facing large cuts in their retirement incomes," said Mr Heald.

"We propose new rules that workers be given priority when benefits are allocated after a company scheme winds up, particularly workers within 10 years of retirement."

He added: "It is not acceptable for workers who spend their entire lives contributing to their retirement, to end up with next to nothing because their pension scheme folds.

"The Government must take steps to rectify this situation as soon as possible."