Michael Eaglestone lost his pension because he trusted the Government – Ros Altmann

    Ros is a leading authority on both private and state pensions,annuities and
    retirement policy. Numerous major awards have recognised her work to
    demystify finance and make pensions work better for people.

  • Ros Altmann

    Ros Altmann

    Michael Eaglestone lost his pension because he trusted the Government

    Michael Eaglestone lost his pension because he trusted the Government

    Michael Eaglestone lost his pension because he trusted the Government

    by Dr. Ros Altmann

    (All material on this page is subject to copyright and must not be reproduced without the author’s permission.)

    The facts:


    Michael Eaglestone worked at Dexion as a welder for 34 years and paid into the pension scheme every week of his working life there.  He earned around £18,000 a year.

    His pension age was 60 and shortly before his 60th birthday, the company asked if he would be able to stay on till age 62, as they needed his skills.  He was tempted to retire at  60, as he had planned, but agreed to stay for a couple more years.  He was looking forward to his pension, he had read Government literature which told him that his pension was safe, so he never for one moment thought that deciding not to retire could put his whole pension in jeopardy.  He had been reassured after Maxwell that the Government had put in proper protections to make sure pensions would be safe in future, and was glad he was in a final salary scheme.  The Government was encouraging everyone to contribute to pensions, he wanted to look after his own future and not live on the state, so he thought he was doing the right thing.

    Expected pension:

    He was expecting a pension of around £10,000 a year, from his scheme or £200 a week in total.

    £110 a week of this was from his own 34 years’ contributions to the scheme. 

    The other £90 a week was from his contracted out State pension rights, since – like almost all final salary schemes – his national insurance earnings related pension was put into his company scheme and he was told by the Government that he would get a ‘Guaranteed Minimum Pension’ of £90 a week from this.

    What happened?:

    In 2003, a few weeks before his 62nd birthday, Dexion went bust.  Michael Eaglestone then discovered that, by not retiring at 60, the law has taken his pension away from him.  Colleagues who decided not to stay on to 62 have been living on their pensions and will have them for life.

    Michael then had to find himself some work, instead of retiring as he had planned.  He could not find any job for months, but finally  managed to get work stacking supermarket shelves through the night.  He has been doing that for 3 years now and hates it, but needs the money.  He earns £9,600 a year and his wife has a part-time job which pays the same.  They have not had a holiday for 3 years and Mr. Eaglestone is very ill.  He still goes to work every night at 10.15pm and finishes at 6.45am.  He has just been diagnosed with prostate cancer and needs a major operation.  He knew he was ill, but was so depressed about losing his pension that he could not face going to the doctor to hear bad news.  The loss of the pension has robbed him of his retirement and his health.  His wife and family are devastated too.

    His pension now:

    Michael Eaglestone has just turned 65 years old.  He is still working and needs to continue to do so, because he has a mortgage to pay.  He is receiving nothing from the Financial Assistance Scheme.  He has written to them three times, explaining the awful financial circumstances he is in, but to no avail. 

    He has been told by the scheme trustees that the Dexion scheme can pay him just about £50 a week (and that may need to be reduced when wind-up completes).  These payments will not start until 8th October.  This means that he will not get a penny of his own £110 a week pension from his 34 years of contributions.  It also means that he is not getting his full state pension either, since the £90 a week SERPS that he would now have in full if he had never joined the Dexion scheme, is being reduced to just £50 a week.  He would be at least £40 a week better off now, if he had never believed in company pensions. 

    But the Government always told him his pension was safe and protected by law.  Yet it is these laws which mean his pension contributions are being used for someone else’s pension and not his own.

    Cancer operation and no sick pay for over 65s:

    Mr. Eaglestone faces a radical prostectomy in a few days time, but has just discovered that, because he is over 65, he is no longer entitled to statutory sick pay from National Insurance, so he will only get 2 weeks sick pay and then the money stops.  He has paid National Insurance since he was 15 years old.  He is now considering canceling his operation, because he can’t afford to live without money, but his wife is adamant he must go ahead to try to beat the cancer.

    Is this Labour’s idea of social justice?

    Labour says it cares about what has happened to people like Mr. Eaglestone, but that it is not responsible for what has happened to him.  This is simply not true.  Government misled him and prevented him from taking the decision that would have secured his pension.  If he had been told the truth about the effect of the legal priority order introduced by the Government and also about the weakness of the official funding standards for pensions, he would not have delayed retirement.  This is the maladministration which the Parliamentary Ombudsman and Public Administration Select Committee highlighted – the fault lies with Government, not the employer or trustees.  It was Government which led Mr. Eaglestone to believe his pension was safe.  He would not have trusted others, but if Government made the laws and said they would protect him, he believed and trusted that. 

    Do MPs really believe that this situation is right?  Is this Parliament’s idea of social justice?  Is this how the UK treats people who played by the rules?  What does it take for this situation to be properly sorted out, rather than listening to Government spin?



    First wrote her story in 2004:

    My husband worked at Dexion for 34 years.  He was due to retire in September 2003 when he reached 62 although he could have retired at age 60 but was asked to stay another two years after being told his skills were still needed.  If he had had any inkling of the coming situation or the possibility of losing his pension there is no way he would have carried on!  If the Government had warned him that he could lose his pension, or had explained about the priority order on wind-up, he would have retired as soon as he could.

    We have been told whatever little pension he does get will not be for another three years and it may be less than the State pension he would have had if he had never paid into the Dexion scheme.

    He has had to try and find work, at 62 that is no easy task.  His health has deteriorated over this past year and he does not feel physically able to go back into factory work.  He is a very proud man and has worked so hard all his life that it broke my heart to see him stacking shelves in a supermarket.  That was only temporary and he has been out of work since the new year although another shelf stacking job may be imminent.

    I lie awake at night worrying about the future.  We still have a mortgage which runs until he is 65 and another option is to sell our house, but to raise any capital we would have to move away to buy a cheaper property and I could not bear to be far away from my family, they are all that keep me going!

    All our plans have been shattered.  We had hoped to spend some money on the house this year but that is now out of the question.  We cannot plan any holidays and worst of all we have to think carefully before we can buy anything for our three grandchildren.

    I try to be positive and believe as long as we all have our health that is most important but sometimes it all gets too much and I cry myself to sleep.

    Update 2005: 

    I have spoken to Audrey and it would appear that they have fallen on hard times financially. Mick is working permanent nights at Tesco’s shelf filling ( He hates it) Audrey works part time at a printers and they live week to week. They have no savings to fall back on. They have not had a holiday for 2 years now and on top of everything else they have been notified that their endowment policy is going to shortfall on their mortgage.

    Update August 2006:

    Mick Eaglestone has been diagnosed with prostate cancer and needs a serious operation quickly.  He knew he was ill, but with the stress of losing his pension and worrying constantly about earning money, he was afraid to go to the doctor to have proper checks.  His wife kept asking him to go and finally he did.  He is frightened of the cancer, but even more frightened of living with no money, so he has kept on working.

    Update September 2006:

    Mick was 65 this month.  He is still working, as they need the money, but he has been told he needs an urgent operation and it is booked for the next few days.  He has now just found out, however, that because he is over 65, he is no longer entitled to statutory sick pay, so he will only get 2 week’s sick leave, but this serious operation will take at least 6 weeks to recover from.  They are looking into selling their house but don’t want to do that.  He is saying he doesn’t want to have the operation because he needs to keep working to earn money.

    His basic state pension is £101 per week.  His state pension statement shows that the Government is actually deducting the £90.17 a week which he would have got from SERPS, because he should be getting it from his Dexion contracted out scheme.   However, his scheme trustees have written to him to say the scheme can only pay him just over £50 per week, as the scheme does not have enough to cover even his contracted out ‘Guaranteed Minimum Pension’.

    He will not get any pension from his 34 years worth of company pension contributions at all and has effectively lost £40 a week of state pension that he would have had, if he had never paid into the Dexion scheme, because he would have his SERPS in full now.

    The FAS has paid nothing and there is nothing in sight from this either.

    His wife is at her wits end and so frightened.


    This has affected the entire family and we all find it heart breaking to see Dads health deteriorating, whilst he struggles to find work and Mum worries terribly about the future (even though she tries to hide it).

    I have 2 young daughters and my husband is self employed, so we have our hands full, financially.  Even if my parents would allow us to help them, there would be very little we could do.

    My parents have worked hard all their life and I cannot bear to think that they will not have anything to look forward to in what future they have left.  They have done their very best to provide for us, apart from getting into debt ourselves, who will provide for them?

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