Fair treatment demanded for pension wind-ups
The Tories have flung their weight behind changes to the rules governing the winding-up of pension schemes aimed at ensuring that company directors are treated in the same way as employees.
Link: UK companies face £15bn pensions payout
Shadow work and pensions secretary David Willetts promised Conservative support in parliament to rush through changes in the winding-up rules for final salary schemes proposed by the National Association of Pension Funds.
These included treating all those who retired in the last year before wind-up in the same way as other employees nearing retirement.
He issued copies of his letter to the government promising official Opposition backing ahead of a Commons debate in which junior spokesman Oliver Heald said the priorities in wind-up should move away from pensions-in-payment first, which has resulted in employees nearing pension age facing the loss of as much as 85% of expected pensions entitlements.
Instead he backed NAPF proposals limiting the protection of pensions in payment to 90% of current level and giving those expected to retire within 10 years protection of up to 75% of entitlement and any surplus to other employees in the scheme.
Heald drew attention to the plight of workers at Allied Steel and Wire which went into receivership last July, with some employees told they could expect as little as 15% or 16% of their entitlement.
He referred to allegations that two directors received pensions packages worth £2m within the year prior to wind-up.
Heald said there were fears ‘a large number’ of other schemes are heading in the same direction.
He deplored plans by some solvent companies to close down their final salary schemes ‘purely on commercial grounds’ denouncing such moves as ‘wrong and short-sighted’.
Heald blamed the crisis partly the loss of £5bn a year in tax resulting from the scrapping of Dividend Tax Credits and quoted the Association of Chartered and certified Accountants stating: ‘The withdrawal of the tax credit is, in our view, the most important single contributory factor in the problems which currently afflict…[pension] schemes.’
Meanwhile pensions minister Ian McCartney issued a statement formally refusing to intervene in further difficulties hitting Maxwell pensioners, claiming they are unrelated to the original fraud and are an issue for the trustees.
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The statement expressed sympathy for members of the Maxwell Communication Pension Plan facing a shortfall as a result of doubtful top-up payments made to members of another Maxwell scheme, but insisted it would not be right for the taxpayer to make a major injection of funds.