My brother has been in a final salary scheme for 23 years. When his company went into liquidation, his pension rights became negligible. I believe that the scheme was underfunded for three main reasons:

The Government lowered the minimum funding requirement

The Government removed the ACT tax refund that cost the pensions industry something like £5 billion a year (i.e. £345 billion since they came into office)

The Government looked on companies as a cash cow by increasing all sorts of taxes such as employers’ NI, environmental taxes and more As a layman I do not understand why the Government has paid out huge sums of our money to Anne Abrahams (the Parliamentary Ombudsman) only to disregard her findings – what was the point of the enquiry?

The Government is hugely over-estimating the cost to tax payers of compensating people like my brother. The annual cost would be small if compensation was paid each year as people come into their pension age and would be taxable and save tax credits to old people (this is Government spin).

The Government seems to be able to finance wars and even political party funding, but is refusing to meet what the Ombudsman, and I, feel are their obligations.

Graham & Sue Kerry write:

For 28 years I contributed to a final salary pension scheme. When I left that employer in 1994 I had a period of non pensionable employment.

I could not transfer my earlier pension benefits to a personal pension arrangement because of the misselling of pensions by insurers. I left my deferred pension where it was, 'safe' in the knowledge it would increase to a substantial pension by my scheme retirement age 63. I will be 61 in August.

Unfortunately, my former employer went bust in 2003 and I have lost almost all my expected pension.

From 1994 to 1997 I worked in non-pensionable employment and contributed to SERPS. I am now informed by the DWP in my pension forecast that the £70+ per week SERPS that I had accrued during those years will be clawed back by the Government under Contracted-out Deductions (CODs) rule.

I have therefore lost both my company pension and my SERPS! If I am “lucky” enough I may receive a fixed rate payment from the FAS up to a maximum of £12000 p.a. This would represent approx 45% of my expected pension.

It would be paid 2 years later than my scheme pension and there is no inflation protection. I feel cheated on all accounts and my retirement will be blighted forever.

I did everything to provide for my retirement. I thought post Maxwell that Government legislation ensured that my pension was safe, secure and GUARANTEED.

Richard Nicholl writes:

I am one of those simple people that likes to work hard and play hard. In order to achieve in life, I learned early on to plan and to organise. Put something in if you expect to get something out of life! So I planned to retire at 60, and to spend some time travelling whiles I was physically fit. I started to save into my company’s final salary pension scheme when I was 21. I read all the booklets, and was reassured, especially after Maxwell that these schemes were strong and protected by legislation.

So far, so good. I did well in my work, staying with the same company and working my way up over nearly 30 years. I played hard too, but made sure that my pension payments and AVCs were up to date. I became a trustee of the company’s pension scheme only to be told a few months later that the company could not afford to continue to pay’s it’s contributions, and therefore the scheme would have to wind up. The company would continue to trade, and we would keep our jobs . Ok, life throws these things at you, and there will still be my pension, as it was protected by legislation, wasn’t it?

WRONG! Can you imagine the horror and stomach churning sickness that we felt when we realised that the very legislation that was meant to be protecting us had actually changed and had weaken along the way, and as deferred pensioners we would be left with virtually nothing because this legislation had let us down so badly. The company had behaved legally in every way, so had the trustees. There was a deficit. There had been one before, which had been made up, but now the new Minimum Funding Requirements (MFR) mechanism did not allow timescales to be stretched to the extent that our company needed, and even if it did, we now found out that 100% funding to MFR meant 10% pension! My expected pension of £18,000 pa is now looking more like £2,000 pa, and even that amount is an estimate, is unindexed and not guaranteed!

So 25 years of contributions had gone down the drain! My life now takes on a completely different attitude. I cannot spend and play hard anymore. I have to save to try and make up for lost time, but the way any savings operate, i.e. they compound annually, I do not have the time. So now instead of dreaming about my travels to far off places, I have nightmares about how I am going to live, how am I going to pay my council tax, afford healthcare, run a car? The thoughts continue relentlessly and each morning this type of compounding continues!

Right then, recover, regroup and go forward, keep a brave face on it! Now nearly a quarter of my earnings go each month to start a new pension, which at the age of 51 leaves me very little time. I joined the pensiontheft.org action group (PAG), to highlight out plight, and to seek redress. I started to get very involved, and to co-ordinate the other workers from solvent company schemes. So we lobby MPs and have meeting after meeting with Ministers. This is a New Labour government, Tony Blair said that he wanted Britain to be a caring, sharing society. Surely the Party of the workers will do everything it can do help us, bearing in mind many people were far worse of than me.

WRONG! This Government callously washed it’s hands of us. We would cost money, and prudent Gordon has his hands firmly on the purse strings for better things than us. He wants to be PM one day, there are only 85,000 of us, we won’t matter! After some pressure, and to avoid a back bench revolt in 2004 the Government announced the Financial Assistance Scheme (FAS). Very good but apart from appeasing gullible MPs, it has achieved next to nothing. It was a headline grabbing exercise. Very few payments have been made, as so many people are excluded by the small print. There is now a proposal to extent it to cover more people. But still less than half will benefit, and the assistance is hardly worth having. I still don’t qualify because solvent company schemes are excluded, and I am too young, and apparently have loads of time to make up my losses!

The Government also introduced a Pension Protection Fund. Ah Good! At last some help! Ah, sorry! This does not apply retrospectively, and again has loads of get out clauses, so schemes and individuals like us can be excluded, (unless it is just before an election, when the deserving Rover workers can be included)!

So what about the democratic process. Government should surely have been providing protection in the form of legislation? Well, er, yes but it actually weakened it, rather than strengthened it. Surely it is responsible then? Yes, the Parliamentary Ombudsman thought so too. The government’s watchdog carried out a 16 month study into what had gone on, and yes, the government had done wrong, and should provide compensation (and apologies to trustees). Good, a new Labour government would surely comply with the recommendations?

WRONG! The government dismissed out of hand the PO Report, and denies any responsibility. Do we have a democracy any more we ask? To find out, the Parliamentary Administration Select Committee (PASC) investigate the rejection of the PO Report, and find that the government was guilty of maladministration, and should compensate us.

In the meantime we have launched a Judicial Review, and action in the European Courts has been taken by the unions involved. Should this really be necessary in a democratic country, whose MPs (with their gold plated taxpayer funded pensions) should be working to achieve justice on our behalf?

For the answer to that we have wait for the government’s next move. I have come from being a simple, carefree, hard working, fun loving, responsible individual, to one who is cynical an would not trust any government minister, document of statement, and who will carry on demanding justice until everyone like me, who has lost their pension through no fault of their own, who have worked had and saved hard all t heir working life, see full restoration of their expected, promised and paid for pension!

And then I will start to dream again!

David Whitehead writes:

It might not have been quite so bad if it had been possible to believe the statements coming out of Department of Work and Pensions. Take for example the statement that the extension of the Financial Assistance Scheme (FAS) will now give help to those retiring before 14th May 2019. They will be paid a proportion of “what they were expecting” on a sliding scale from 80% for the oldest down to 50% for the youngest.

The member will assume that the pension he expected would be as stated in his leaving document. He would have no doubt expected increases especially on the Guaranteed Minimum Pension (did you know the Minister actually said that the word “Guaranteed” was not intended to be a guarantee!! The way that the actual pension payable is calculated by the FAS means that the vast majority will not receive 80% let alone 50%, and those retiring in 2019 are more likely to have a starting pension of around 20/25% with no further increases.

We have around 150 deferred members in our scheme which is being wound up. Not one of them will be receive compensation at the age-related rates so proudly announced by the Government.

Graham Buckley writes:

Yes I am another person having lost part of his pension. However, I would like to point out there is a more important point now developing and that is the Government is refusing to accept the ruling of Maladministration of both the Parliamentary Ombudsman and the Parliamentary Affairs Select Committee. Can MPs allow any Government to ignore the will of Parliament as expressed by the Ombudsman and the PASC? Ministers need to be reminded that they are NOT feudal overlords with unlimited power over their serfs. Mps are elected to represent their constituents and all Government authority comes ultimately from MPs, maybe this is the time when MPs must stand up and literally be counted! This is still, at the moment a Democratic Country, it would do well to stay so.

Secondly, Government has to be trusted, if there was a risk for people to lose their pensions then there should have been the same unequivocal warning on Government Pensions Advice that has to be put on every Investment advertisement and policy. There has never been such a warning and so people (perhaps naively) trusted Government. Will all Government pensions advice in further bear the warning ‘benefits are not guaranteed and that you may lose all or party of your pension”? I wonder what the take up will be then?

Frankly the young might be better off spending their money having a good time while they are young rather than save for a Pension which might be taken from them. At least they could have some happy memories while sitting huddled over a candle warm in their old age!

Derek Hoye writes:

I am an retired employee of a so called Solvent Employer Wind-up and am in receipt of a Guaranteed Minimum Pension which equates to around two fifths of my promised pension. I must confess to a certain amount of “head-in-sand” when it came a question of pensions but looking back in my files, I fail to see how I could have behaved in any other way that might have saved me from this predicament.

In 1998 I was informed that due to the high cost of maintaining the Group Pension Final Salary Scheme, the company would be introducing a different “more flexible” scheme. It was stressed however that our, current benefits would not affected.

OK so far!

Then in April 2001 it was announced that the Final Salary Scheme would be wound-up

Uh oh!

Then relief as my pension was still assured,

OK

In December 2003, four months before my retirement date, I was informed, by letter, that an, independent professional trustee was to be appointed. The letter also made the following statement:- “Many members may have been concerned to read frequent reports concerning the dire financial position of many pension funds. However, we are please to say that so far as this fund is concerned it has not suffered adversely as a result of the recent poor stock market performance. A recent interim assessment of the scheme’s position shows that there is more than sufficient resources to meet the scheme’s Minimum Funding Requirement as laid down by the Government”. Looking up the term Minimum Funding Requirement I find:- A rules introduced in the wake of the Maxwell, pensions scandal which was intended to ensure that company pensions funds always had enough, assets to pay out their liabilities (i.e. pensions to retired members of the scheme).

In February 2004 I contacted the company who, as far as I knew, are still handling the pensions for my company and, asked them for a break-down of my entitlements. They replied a month before my retirements stating that, I was to receive my full benefit.

Just before my retirement date when I realised there had not been any further, communication from the pensions people. There followed a month of phone calls which were met by, “we are sorry, there is a problem and we re dealing with it! Eventually I was passed on to the professional trustees who eventually informed me that I was to get my full tax free lump sum but the trustee was unable to pay benefits in excess of the Guaranteed Minimum Pension as it was unclear as to the level of coverage which can be provided by the assets.

What! Where did this Guaranteed Minimum Pension spring from, what happened to my cosy Guaranteed Minimum Requirement as laid down by the Government?

Needless to say two and a half years later I’m no further forward having gone through the Internal Dispute Resolution Procedures with the trustees. Involved OPRA, written to Blair, Brown, Blunkett, Timms my local MP and the MP for the company constituency and even had a detailed letter from HM Customs and Excise regarding the wind up of my pension scheme.

My conclusion is that my company acted lawfully, if not morally, so somewhere down the line the Government left the door open for my company to sequester my hard earned pension to improve their profit margin.

What happened to your pension? Join in the discussion at Your Say

This article was created: 8 August 2006.
This article was last edited: 13 November 2006.

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