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UK: Unions' warning on safety net for pensions
By Alexander Jolliffe, Financial Times
June 9, 2003
- Unions warned ministers yesterday not to cut guarantees that protect
millions of pension scheme members from rising prices.
They were reacting
to news that Andrew Smith, the work and pensions minister, will announce
plans this week to scrap the rule that raises pensioners' payments by 5
per cent or in line with inflation, whichever is the lower.
The Trades Union
Congress said: "If inflation rose, pensions would be worth less and
that would be unacceptable. Unions might have to think about negotiating
While it welcomed
plans to bring in a safety net that would pay pensions to former employees
of bankrupt companies, the TUC said it would urge ministers to reconsider
the inflation-proofing proposals.
biggest private sector union, accused ministers of caving in to business
lobbying by proposing to cut the inflation-proofing guarantee. It said:
"This is a very dangerous move. It is just another sop to the
Because inflation is
low, ministers believe the obligation to finance inflation rises of up to
5 per cent is placing unnecessary costs on final salary schemes.
The comments came as
Amicus - a vocal critic of pensions policy - admitted it had a £30m
deficit in its final salary pension scheme. It said there were no plans to
cut benefits, raise staff contributions or increase the retirement age.
warnings follow a weekend march in London by former employees of ASW,
which went into liquidation last July leaving many people with a fraction
of their expected pensions.