Forum Brief: Pensions protection

Tony Blair has indicated that compensation could be made available for 60,000 workers who have lost their pensions when their companies collapsed.

Government Response: Department for Work and Pensions

Malcolm Wicks, pensions minister, said: "We are looking at what we can do, and I hope very much in the context of the debate at the moment on the pension protection issues and legislation we will be able to come forward with a solution.

"The PM re-confirmed that we are taking the issue seriously and giving it active consideration.  It has been uppermost in our minds at times during the committee's proceedings and I expect honourable members will wish to return to the subject at a later stage.

"We are not pretending this is an easy problem to solve - everyone has acknowledged the complexity of circumstances which have led to some individuals losing facing a bleak future on retirement despite having saved in their company pension scheme.

"So we are currently working with trustees to gather data about schemes and establish the number of people who might be in this situation.  We will need to work closely with partners across industry and the unions on any possible way forward.  We will come back to the House when we have a better view.

"Meanwhile I would stress that with the Pension Protection Fund (PPF) we are seeing to avoid the risk of an even bigger tragedy for individuals in the future.  We should certainly deliver protection for workers through the PPF - we owe it to everyone to deliver good law going forwards.

"My hope is the same as the PM's - that we will be able to come forward with a solution for those workers under the legacy of past failure.  But we are not there yet, and we do not want to promise a particular solution which is impossible to deliver."

Forum Response: Institute of Directors

Derek Brownlee, pensions executive at the IoD, said: "Without compensation for those who have lost their pensions, there is a danger that public confidence in the pensions system will be severely eroded, and pension saving will fall.

"However getting the detail of the compensation right - establishing who would qualify, how much compensation would be paid, and most importantly who would pay for it, is a hugely complex issue.

"But, given the firm opposition of the government to paying compensation so far, it would be surprising if any meaningful compensation plan emerged."

Forum Response: Association of Consulting Actuaries

David Robertson spokesperson for the ACA said: "The ACA welcomes the prime minister's concern at the plight of people who have lost out on their pensions ahead of the launch of the Pension Protection Fund. 

"The ACA hopes that any solution will be fair across all those who have lost out.  It would be unfair if compensation was offered to some people and not others, based upon scheme by scheme investigations of what had been said or not said to members or whether there has been a total loss or not.

"The ACA opposes this retrospective compensation being financed by a PPF levy of defined benefit schemes as this would place a heavy burden on these schemes from the outset of the PPF.  It should be met by the government out of general taxation or, possibly, unclaimed assets held by financial institutions.

"It would be sensible, however, that the administration of any compensation payments is undertaken by the PPF."

Forum Response: Age Concern

Gordon Lishman, Age Concern's director general, said: "We welcome the suggestion from the prime minister, yesterday that he would consider compensating those 60,000 workers who lost their pensions following the collapse of their companies.

"This is a positive development which we hope will be confirmed in the near future.

"The setting up of the Pension Protection Fund, is necessary to restore confidence occupational pensions. Never again should people who have paid into a pension scheme for many years be left with next to nothing if their employer goes bust."