Following the collapse of Cardiff-based Allied Steel and Wire (ASW) in 2002, former employees are still campaigning to get the pension they were promised.
Around 1,000 ASW workers across Cardiff, Belfast and Sheerness lost their jobs and with it, a lifetime of pension savings. Following initial campaigning by the steelworkers, the Financial Assistance Scheme (FAS) was launched by the government in 2004 to protect pensions for members in wound-up schemes. Despite securing a deal that would see them receive 90% of their pension, many retirees in the scheme are claiming they are getting much less.
Pensions expert Stuart Price, Partner and Actuary at Quantum Advisory, said: “The ASW case really kick-started the need for pension protection structures to be put in place, with the Pension Protection Fund (PPF) now the current lifeboat scheme.
“The reason the ex-steelworkers are not receiving as much as they expected is because pension built up before April 1997 is not fully inflation-proofed once in payment. This basically means, any benefits built up before 1997 will not see an increase in payment.
“While I fully sympathise with the steelworkers’ situation, if the government was to intervene in this case, it would surely set a precedent. The PPF also does not provide increases in payment to pre-1997 benefits, so if this was applied to ASW pensions, the PPF would be under enormous pressure to provide increases to pre-1997 benefits for all individuals receiving compensation from the PPF; a move that could cost £billions.
“As the PPF is currently very well-funded, it may be possible in the future for the PPF to provide discretionary increases to pre-1997 benefits, and perhaps the surplus could be used to increase the ASW pensions too. This is purely supposition, and if it was even possible it could be many years before it came about, by which time it could be too late for some of the ASW pensioners.”
Stuart Price, Partner and Actuary at Quantum