News - Government faces legal action on pensions
The government is being taken to court by one of Britain’s biggest unions over the plight of workers who lost their pensions when their employers went bust.
The Amicus trade union plans to take a case to the European Court of Justice on behalf of its members who used to work at Allied Steel & Wire (ASW) and United Engineering Forgings.
Workers at the two firms discovered that when their firms went to the wall that the company pension fund was in deficit, and as a result many lost their retirement savings.
The union will claim that the Thatcher government of the early 1980s failed adequately to implement a 1980 EU directive, which required them to introduce by 1983 measures to protect employees from losing their pensions if their employer became insolvent.
Lost pensions
Eight hundred workers were made redundant when Cardiff-based ASW went into receivership in July 2002,
Nearly 100 people were made redundant from United Engineering Forgings (UEF) in Bromsgrove back in 2001.
Workers at the two firms lost up to 90% of the value of their occupational pensions as the companies went under, many after decades of paying into the fund.
The cases helped trigger a national debate about the safety of company pension schemes.
Earlier this month the government announced that, in future, company scheme members would be protected by a new insurance, the pension protection plan.
Under new pension rules, schemes are to be forced to pay into the new pension protection fund, an insurance to protect 90% of the value of current workers’ pensions and the full value of retired members.
But the government has so far refused to allow the pension protection plan to pay workers retrospectively.
Seeing sense
On Wednesday the ISTC steelworkers union said it was considering taking legal proceedings against the government unless ministers “see sense” and compensated ASW workers for their lost pension savings.
An Amicus spokesperson told BBC News Online that as far as they were concerned the gloves were now off.
“The ISTC is only threatening legal action, we are going ahead with it on behalf of our members who are now facing retirement poverty.”
If Amicus wins its case it could open the floodgates for a host of similar claims.
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