CHRISTMAS came early for 140,000 victims of the pensions scandal who were last week handed a surprise present, bringing to a happy conclusion their bitter six-year battle for justice.
Pensions Secretary Peter Hain promised that not only will they
enjoy the income in retirement they had been promised before their employers collapsed, but that compensation will be backdated to May 2004, providing a welcome nest egg.
Yet Hain's announcement comes after 10 previous pensions secretaries and ministers, including Alistair Darling, Andrew Smith, Alan Johnson, David Blunkett and John Hutton, declined to help the victims of pension scheme black holes, maintaining that the Government could not afford to foot a bill which the Department for Work and Pensions put at more than £12bn.
Campaigners argued that the true cost was much lower, at perhaps £2bn to £3bn; and would be lower still if the schemes were allowed to stop buying annuities, and the assets within them used to pay pensions; and even lower yet when tax returns and the impact on means-tested benefits were taken into consideration.
The Government appears to have finally conceded all points after examining a report by Andrew Young of the Government Actuary's Department which concluded that the best way to pay the pensions was for the Government to absorb any assets left in the funds and to invest them until the pensions fell due.
This argument was first made by pensions adviser Ros Altmann on behalf of the victims as early as 2002, when it became clear that tens of thousands of individuals and their families were going to be left destitute in their old age after their pension schemes imploded.
Instead they can now look forward to nearly all the pension they expected, or rather 90% of it.
Altmann said: "I really welcome this additional improvement to what the Government was prepared to provide. It has been a long hard fight, but it shows that tenacity and integrity do win out in the end.
"It has been a privilege to campaign alongside such a wonderful group of people, who have suffered so much but behaved with such good spirit and dignity.
"We also have to thank many, many other people who supported us, not least from all political parties, some of whom put their own necks on the line to help us."
Andrew Scott of PS Independent Trustees, who is now advising at Blyth & Blyth, said: "I think it's a fantastic early Christmas present for all the members of schemes whose sponsoring company went bust before April 2005. We've already had a positive reaction from a number of members who are feeling much better about their future life, which was looking pretty gloomy until the recent improvements.
"All of our members are eligible for extra help, so we owe the Treasury and DWP a vote of thanks. They may have been very Scrooge-like in Christmases past, but they now appear to have reformed. As a result, Christmases future look a lot brighter for so many.
"It's a shame it has taken this long and that 100% compensation hasn't been achieved, but this is substantially more than anyone might have expected a year ago, and things have certainly come a long way from the paltry £20m a year first offered in May 2004. A more generous offer then would have saved a lot of heartache and pain for the Government and the pension scheme members."
However, money will not start flowing into bank accounts immediately, as primary legislation will be required to make the necessary changes to the Pensions Act, which could take many months. Furthermore, it will only help members whose schemes went down after 1997 and before 2005 who are eligible for the Government's Financial Assistance Scheme (FAS).
Similarly, only where the trustees have applied for membership of the FAS and been accepted will money be paid.
However, help will now be extended to a new group of 11,000 victims whose pension scheme went down, even though the employer or parent group remained solvent.
In all, the Government now admits the rescue package will cost taxpayers just £2.9bn, which will require an additional injection of £935m cash to add to what ministers had already put on the table.
However, Altmann stresses: "These are gross figures, which means they take no account of how much the Government will get back in tax revenues, and also cuts to the benefits bill, because people will not need to turn to the state for help."
The latest improvements are significant. Pensions will be payable from a scheme's normal retirement age, going down to 60, whereas previously they were restricted to 65. Members will receive 90% of their pension at the date of wind-up.
They can take part of their pension as a tax-free lump sum if they wish. Pension accrued after 1997 will be increased annually in line with pensions, up to 2.5%. Widows or widowers will receive half a spouse's pension after they die, according to scheme rules.
Announcing the new arrangements, Peter Hain said: "All those who lost their pensions had done the right thing by saving for later life. They played by the rules, only to see their pension savings disappear through no fault of their own.
"Some I have spoken to were within weeks of retirement, having paid their contributions for 30 years or more, when they were so cruelly deprived of their pension.
"So I'm delighted that we are able to announce a settlement that will provide justice for the 140,000 people affected when their schemes were wound up, including members of schemes where the company is still solvent.
"This builds on the substantial steps we've already taken to put right the unfairness they experienced."
'We were shocked and angry'CHARLES Husband began working for Blyth & Blyth in 1951 and spent 45 years with the company before retiring in 1996. The news that his pension was to be frozen and then that it would be cut by nearly half when the engineering firm got into trouble came as an enormous shock, writes Teresa Hunter.
Charles, 73, of Edinburgh, says: "It was a bolt from the blue. We had no idea the pension scheme was in trouble. Even when rumours began to circulate about possible problems we thought pensioners would be protected."
But the former engineer was wrong. So severe were the problems with the scheme that it was one of the few in the country where those already retired and drawing their pensions saw their income slashed. Those yet to retire lost everything.
Charles says: "The membership was shocked. Some were very upset, others were absolutely livid.
"First the pension was frozen and we lost our annual upratings, but then it was slashed by 40% overnight. All in all we lost around half what we expected. It was a terrible blow."
Worst hit were those yet to retire, some of whom were very close to retirement. They had lost all the pension they had worked hard for, often after 40 years with the company.
It has been a long hard battle for justice for these members, and victims have welcomed the Government's U-turn. But the scandal has taken its toll on some and come too late for others.
Some members are now elderly and frail, and what should have been the happiest and best years of their retirement have passed them by.
History of a pensions scandalEarly 1990s: early rumblings of problems as a few small schemes including Belling run into trouble.
1997: Lister crashes.
1998: Alistair Darling appointed pensions secretary.
1999: Blagden Chemicals founders. Stephen Timms becomes pensions minister.
2000: Kalamazoo and British United Shoe Manufacturers fail.
2001: Ian McCartney appointed pensions minister.
2002: Pension crashes accelerate as Blyth & Blyth and Allied Steel & Wire collapse with big black holes. Andrew Smith becomes pensions secretary. The Government refuses compensation.
2003: Dexion collapses. Protests by victims gather pace. Malcolm Wicks is new pensions minister.
2004: Ombudsman Ann Abraham begins her investigation. Alan Johnson becomes pensions secretary. The Government offers limited help through the Financial Assistance Scheme and sets up the Pension Protection Fund.
2005: David Blunkett is pensions secretary. Campaigners reject the Government's offer through the FAS and take their case to the European Court. Stephen Timms returns as pensions minister.
2006: Abraham finds the Government guilty of maladministration and says it should compensate victims. New pensions secretary John Hutton rejects her findings. The European Court finds in the victims' favour, as does a High Court ruling. Victims begin judicial review in the High Court. James Purnell becomes pensions minister.
2007: MPs on the Public Administration Select Committee support the Ombudsman and call for more help for victims, who also win partial victory at judicial review. Both sides appeal. Peter Hain becomes pensions secretary and Mike O'Brien pensions minister.
December 2007: The Government finally capitulates.
The full article contains 1503 words and appears in Scotland On Sunday newspaper.
