Late Change Made to Pensions Bill

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Late Change Made to Pensions Bill

By Ben Hall, The Financial Times

March 3, 2004

Businesses will be required to consult employees over changes to pension schemes under a late addition to the pensions bill.

Andrew Smith, work and pensions secretary, told MPs that employers would have to discuss changes with recognized workplace consultation arrangements.

The move would be tantamount to an obligation on employers to give notice before closing an occupational pension fund.

The main feature of the bill is a pension protection fund that will ensure that retirement benefits are paid should their fund be wound up by an insolvent company.

Mr Smith faced criticism from opposition and Labour MPs for not offering compensation to the estimated 60,000 workers who have already lost pension rights.

A majority of MPs have signed parliamentary motions demanding that the government ensures that future pensioners are compensated. Ministers are concerned that MPs might amend the bill to that effect as it progresses through the Commons. They insist they are considering compensation but must first calculate the number of people affected and how to define the beneficiaries.

The government will introduce immediate vesting for short-term workers who currently get only the sum of their pensions contributions repaid - with no tax, interest or capital benefits - if they leave within 18 months.