Steel pensions fear another betrayal

Martin Shipton

Former steelworkers who lost their pensions when the company they worked for went bust more than 20 years ago fear they are about to be betrayed again.

Employees who worked for Allied Steel and Wire in Cardiff subsequently got 90% of their pensions back from a compensation fund, but crucially the payments they receive were not index-linked and their value has been significantly eroded over the period since.

On Tuesday September 2, a House of Commons committee will start scrutinising the UK Government’s Pension Schemes Bill, a piece of legislation intended to improve the protection of pension funds.

Part of the scrutiny will entail examining the current position of the existing protection offered by the Financial Assistance Scheme and the Pensions Protection Fund.

Indexation

A spokesperson for the Pensions Action Group, set up to campaign for the ASW workers and others in a similar position, said: “The most outstanding failure of both these schemes has been the lack of the indexation that the original scheme members paid for, and specifically the lack of any indexation for a member’s pre 1997 pensionable service.

“We understand that various MPs and members of the Lords will introduce an amendment to the Bill to remedy this situation, as the current government is delaying such a move against the recommendations made in a report dated March 2024 by the Work and Pensions Select Committee. We need every MP to support the amendment.

“We hope members of the Committee will be fully aware of the stress that this pre-1997 zero indexation is causing.”

The Pensions Action Group was founded in 2002 following the collapse of a number of companies including ASW and their so called “guaranteed and safe” final salary occupational pension schemes.

Campaigned

The spokesperson added: “We have campaigned for over 23 years at all available venues and succeeded in both the UK and the European courts. However, we are still frustratingly waiting for what we were promised and for which we paid for.

“It has become clear that the headline award figure of the Pensions Protection Fund (PPF) and the Financial Assistance Scheme (FAS – now administered by the PPF) providing 90% of our lost pensions is a myth with many FAS members in their 70s and 80s now receiving 50% or less than what they had rightly expected.

“Our campaign has been focussed on the lack of any indexation on our pre-1997 pensionable service, which members had paid for. After not even getting to meet some previous Pensions Ministers, we turned to the Work and Pensions Select Committee (WPSC), and with the support of the then Chair Sir Stephen Timms we gave evidence in November 2023.

“In early 2024 the WPSC published their report recommending to the then UK Government changes to FAS and the PPF potentially using some of the then £13bn PPF surplus.

“In June 2024 there was a change of government, although we are told that by then the previous pensions minister, Paul Maynard, had agreed the vital indexation changes with the DWP and Treasury.

“Since then, we have met the new WPSC Chair [Labour MP Debbie Abrahams] and in early 2025 the current Minister for Pensions [Swansea West MP Torsten Bell].

“Since that time in WPSC evidence sessions and in communications we have been informed that a solution is being ‘worked on’, but that it is ‘very complicated’. During this period alone 5343 FAS members have sadly died since our evidence session. Since the formation of FAS in 2004 the number of recipients has reduced from 140,000 to 90,000.

“We have widespread support both inside and outside Parliament but cannot make progress with the Minister continuing to refer to the delays and issues.”

Prime Minister

The spokesperson contrasted the position of the Prime Minister, whose pension is fully index linked, with that of the ASW and other pensioners who are losing out.

They also pointed out that food inflation was now running at 4.9% per year, while the reduced pensions of those affected by redundancy had received virtually 0% over the last 20 years.

In another anomaly, retired mineworkers, by agreement with Parliament, are benefitting from their scheme’s surplus, despite the UK Government still being the final guarantor of their schemes.

The spokesperson said: “The current PPF surplus has risen to £14bn, with the government claiming it cannot use these funds as they are the final guarantor of the PPF. The PPF surplus includes the funds and members contributions from the residual scheme assets

“Additionally, despite the PPF surplus having arrived from the levies that surviving company schemes pay to the PPF, and good investment, with no additional direct government funding, the government now assumes this surplus to be theirs, to help improve the balance sheet.

“To pay the pre-1997 indexation at 2.5%pa will cost £13m per year on an ongoing basis for the next 10 years. The average age of FAS recipients is now 73, so over the 10 years we should expect to see a considerable decline in costs during and after that period.

“In the last few months, we have lost so many Financial Assistance Scheme members and to delay and continually ignore this major social injustice remains both financially and morally wrong, and devastating to the individuals affected, and their spouses.

“We implore the Minister to act immediately to correct this major injustice. Confidence in pensions savings is at an all-time low, and the country needs some reassurance that when workers save for their retirement their savings will be safe and secure.”