Bail-out for workers' pensions

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Bail-out for workers' pensions

BBC News

November 10, 2003

Workers who faced losing part of their pensions because of wind-up rules after their firm was taken over have been bailed-out by shipping giant Maersk.

The company said it would fund the deficit in the Sea-Land Services pension plan, a scheme it had acquired when it took over the company in 1999.

The move means members will now receive their full pension entitlement.
Maersk said it was "the right thing to do", even though the firm was under no obligation in law to do so.

Back-track

Pension experts applauded Maersk's decision.

Malcolm McLean, chief executive of the Pensions Advisory Service, said he was elated by the move.

"It is an amazing turnaround. It is absolutely fantastic," he told BBC News Online.

"I just wish they had done it before. They could have saved themselves a lot of bad publicity. But now they have done the decent thing, let's give them credit now."

Wind-up rules

Maersk inherited the Sea-Land Services Plan as part of a takeover in December 1999, and the decision was taken to wind-up its pension scheme in March 2002.

There were 196 deferred members of the pension scheme who had not yet retired, and only 15 became Maersk employees and were eligible to join the Maersk company pension scheme.

Under the current legislation on wind-ups, a full pension was only guaranteed to former Sea-Land employees who had already retired, while these remaining workers were faced with losing up to half of the pension they had accrued.

The Department for Work and Pensions is in the process of changing the rules which surround pension scheme wind-ups, but they will not be introduced until 2005.

It has consistently ruled out applying the rules retrospectively.

In a statement, Maersk said: "The decision has been made on a voluntary basis, as the Sea-Land Services Plan is not covered by the proposed regulations announced earlier this year by the Department of Work and Pensions, which have no retrospective effect.

"However, the Maersk Company believes that ensuring all members receive their full pension entitlements is now the right thing to do, to take account of the spirit and intention of the proposed new measures."