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Pensions Protest Takes to Streets

By Rupert Jones and Michael White, The Guardian

February 13, 2004

Workers who have lost company pensions after their employers went bust today take to the streets of central London to protest at the government's failure to address the issue in the long-awaited pensions bill. 

Yesterday saw publication of the bill, which represents the government's response to the crisis that has engulfed retirement saving. 

The contents of the bill had been well trailed, with the central measure a new compensation scheme which will from next year protect millions of members of final-salary company schemes if their employer goes to the wall. 

But many commentators claimed that the government had missed an opportunity to address bigger problems and said there were not enough incentives to encourage people to lock up cash in a pension. 

Increased life expectancy, people not saving enough for retirement, stock market falls and low interest rates are having a devastating impact on millions of pensions. The factors are also helping to fuel the problem of record numbers of companies closing final-salary schemes to new staff. 

While the Conservatives were quick to attack the government's response, ministers are likely to be more concerned about the scathing criticisms from organisations such as the Consumers' Association and the National Association of Pension Funds. The new compensation scheme, the pension protection fund, is due to start next year and will guarantee that workers receive at least 90% of their pension if an employer goes bust. 

Andrew Smith, the work and pensions secretary said he wanted to ensure that people "never again face the injustice of saving throughout their lives only to have their pension slashed just before they retire". 

Yet there was nothing in the bill to help the tens of thousands of workers who have already seen some or all of their company pension snatched away. Workers at steel company ASW and other failed firms have been campaigning for compensation, and have held protest marches, met ministers, handed in petitions and even performed a striptease on the beach during the Labor party conference. 

Today at noon they are protesting outside the royal courts of justice in central London, because "justice is what we are fighting for". Workers such as 56-year-old ASW veteran Keith Plowman claimed ministers had a "moral duty" to do something. 

The Department for Work and Pensions said it had enormous sympathy for those who had lost promised pensions. But, because the new protection fund was an insurance scheme, the rules could not apply retrospectively. 

Campaigners said this ignored the fact that the playing field was far from level, with the pensions of MPs and public sector employees guaranteed by taxpayers such as Mr. Plowman. He said that he and other victims were supporting public sector pensions through their taxes. "What is immoral about the public supporting ours?" 

The protection fund will be paid for by a levy imposed on all companies that offer final-salary pensions. The DWP confirmed that for the first year at least the fee would reflect only factors such as the number of people in the scheme and would not distinguish between well run and badly funded schemes. Critics said this meant well run companies would be subsidising irresponsible employers. The DWP said the "risk-based levy" would be introduced in 2006. 

The pensions package was condemned as inadequate by former social security minister Frank Field, who promised to table radical amendments. 
What the act will do for workers 

· Compensation: New pension protection fund to compensate final salary company scheme members if their employer goes bust. 

· New watchdog: Occupational pensions regulator Opra will be replaced by one which will focus on fraud, under-funding and maladministration. 
· Indexing slashed: The government is cutting the protection against inflation that applies to final salary pensions by halving the indexing from 5% to 2.5%. 

· Bumper payout: Those who defer taking their state pension for five years would be rewarded with a lump sum of up to £30,000. 

· Web help: An online planning service will be set up to help people calculate how much they will have to retire on. 


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