Support for Legal Action by Unions Against Government
by Dr. Ros Altmann
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I welcome, though with sadness, the move by the ISTC and Amicus trade unions to pursue legal action against the Government, for failing to properly protect pension contributions of members of ASW pension scheme and other UK final salary private sector schemes.
I applaud the unions for having the courage to fight for the pension rights of their members at ASW and this clearly demonstrates the value of having a caring union to help workers caught in such a grossly unfair situation.
The problem of wind-ups on insolvency is a terrible indictment of our pension system. Having been involved in pension research and policy for over 20 years, I care about pensions and am deeply concerned at the damaging effect on confidence which this problem is having. I believe that the Government must compensate these victims as soon as possible, in order to try and restore confidence in our private pension system.
Having met so many of the thousands of people whose lives have been devastated by the loss of their ‘promised’, ‘secure’ pensions, I find it hard to believe that the Government is taking so long to agree that the mistakes of our pension system must be made good. In 2000, the Government issued a consultation in which it acknowledged that members believed their pensions to be safe, when in fact they were not. At the time, as a consultant to the Treasury, I recommended to the Myners Review that the wholly inadequate Minimum Funding Requirement (MFR) should be replaced by an insurance arrangement, which would guarantee to pay pensions to people whose employer failed, if there were insufficient assets to pay promised pensions. The insurance idea was rejected. Only now that so many schemes have failed, has the Government finally proposed insurance protection, but it will not come into effect until 2005. This leaves many thousands of people still without the pensions which are rightfully theirs.
I am offering my full support to the cause of achieving compensation for the victims of this situation. I offer my time and my expertise to help resolve this matter and would hope that it will not have to get as far as a Courtroom. The taxpayer would then be liable for legal costs and may also be forced to purchase annuities for all those affected. This could cost billions of pounds and would be dreadfully damaging to public finances. I have proposed a scheme which could help to resolve this at minimal cost to the Government. If the Government accepts proposals to run the schemes on, rather than buying annuities, the cost of compensation can be spread over many years and is likely to average less than £100 million a year. I believe the Government will be much better advised to settle this matter now, rather than lose in Court.