Lifeboat sunk by promises
The 125,000 people who were stripped of some or all of their pensions when their schemes were wound up before April 2005 suffered another blow on Wednesday night. The House of Commons rejected a plan for a rescue scheme which would have raised their compensation, paid it earlier, and protected the amount against inflation.
Campaigners had been confident that enough Labour MPs would vote against the Government to force it to accept a ‘lifeboat’ plan supported by Conservative and Liberal Democrat MPs. But when the vote came just 15 Labour members rebelled and the Government threw out the amendments to its Pensions Bill by 22 votes.
The plan would have given the 125,000 the same benefits that are paid under the Pension Protection Fund, which currently only covers schemes that wind up from 6 April 2005. That would have improved the compensation from 80% to 90% of their core pension, paid it at the original pension age of the scheme rather than 65, and given protection against inflation up to 2.5% a year. The PPF would have taken responsibility for paying the compensation, with a Treasury loan to cover the extra cost.
Dr. Ros Altmann, who has campaigned tirelessly for these pensioners, sees the rejection as a betrayal by some MPs.
"There was an offer on the table of money now for these people. Instead they have gone for slow torture. The PPF gives people their pension on time. The FAS has to wait for the endless bureaucracy to work. They need their money now. These Labour MPs have betrayed their constituents by not voting for this rescue plan."
Some rebels were probably bought off by concessions announced during the debate by Pensions Minister James Purnell. He promised to include in the FAS 8000 people in 15 pension schemes who are currently excluded. That will cover most of the so-called ‘solvent employer’ schemes. They had previously been outside the Financial Assistance Scheme because the Government believed that the employer should have put money in. But they would now be included if that would have led to the company going bust.
The Minister also boosted the level of interim payments from the FAS from 60% of benefits to 80% and promised that a review of the funding of the FAS, announced in the Budget last month, would now produce some findings by the summer. It had been expected to report towards the end of the year.
Ros Altmann says the battle continues. She told Saga that the lifeboat fund amendments would now be tabled in the House of Lords when it considers the Pensions Bill over the next few weeks.
Paul Lewis
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