MP calls on government to protect 100 per cent of worker pensions

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Jonathan Evans (Con, Cardiff North) this afternoon called on the Minister for Pensions to extend pension protections for private-sector workers, as he led a private members' debate on the Pension Protection Fund (PPF) and Financial Assistance Scheme (FAS).

Evans was inspired by the employees of the steel company ASW, who "had every reason to believe their pensions would be safe", and yet upon retirement many found they had been stripped of their savings entitlements.

Their experience contrasts with the treatment of employees in the public service and nationalised banks, whose pension funds have been guaranteed by both the previous and current government.

Evans challenged the parliamentary discourse of describing cases of pension fund failures as a "tragedy", as it implies a sense of unfairness rather than the "fraud" he regards it to be.

People who had loyally contributed to their funds for thirty or forty years "would have been better off having thrown their contributions away", said Evans.

Both the FAS and the PPF claim to guarantee protection to pensions to a threshold of 90 per cent, but Evans believes the public have been "sold a lie".

The Labour government's legislation covered inflation-proofing to 2.4 per cent, which is now less than half of the current inflation rate.

Problems were further compounded in the switch from RPI to CPI calculations, and there are a long list of contingencies which prevent many fund recipients from accessing more than 50 per cent of their savings.

Evans criticised the lack of inaction from his own party on the issue, as their criticisms of Labour during the 2010 election inferred that steps would be taken to improve the situation.

He called on the Minister to extend the 100 per cent pension protection for workers in bailed-out banks and the public sector to include all private-sector workers, to increase the inflation cap and to establish a hardship fund for those worst-affected.

Evans also recommended a reconsideration of the current requirements for early retirees, which he described as "excessive and wrong".

The Minister for Pensions Steve Webb (Con, Thornbury and Yate), sympathised with the ASW workers, however was unable to offer any concessions on the existing threshold of 90 per cent.

He explained that lifting in caps on inflationary indexation would lead to industry incurring "a significant cost" that could discourage quality pension schemes from operating.

"We simply have no slack in the budget," said Webb, and "with the present state of public finances it would be dishonourable for me to offer false hope".

Webb declared that he had "huge sympathy" for affected workers, but there was no realistic prospect of improved protections that extended the current state of the FAS.