Campaigners have welcomed a £2.9bn rescue package for 140,000 workers who lost their pensions when their companies went bust.
Campaigners have welcomed a £2.9bn rescue package for 140,000 workers who lost their pensions when their companies went bust.
Work and Pensions Secretary Peter Hain has set out plans to restore 90% of the value of their pensions.
Work and Pensions Secretary Peter Hain has set out plans to restore 90% of the value of their pensions.
That brings them in line with other workers covered by the Pensions Protection Fund, set up two years ago.
That brings them in line with other workers covered by the Pensions Protection Fund (PPF).
The boost follows a sustained campaign from workers, and criticism from MPs, the Parliamentary Ombudsman and others.
The boost follows a sustained campaign from workers, and criticism from MPs, the Parliamentary Ombudsman and others.
Peter Hain said the money, which will mainly come from taxpayers, will deliver justice to workers "cruelly robbed" of their pensions "through no fault of their own".
Peter Hain said the money would deliver justice to workers "cruelly robbed" of their pensions "through no fault of their own".
The settlement will benefit 130,000 workers already eligible for the Financial Assistance Scheme (FAS) and another 11,000 workers who are members of failed pension schemes belonging to solvent employers.
The settlement will benefit 130,000 workers already eligible for the Financial Assistance Scheme (FAS) and another 11,000 workers who are members of failed pension schemes belonging to solvent employers.
Look, I don't say we have done this as quickly as everybody would have liked Peter HainWork and Pensions Secretary
The latter group had been excluded from the FAS.
In March, the government's directing actuary Andrew Young was asked to report on the best way to use the assets of failed company pension schemes to make the old scheme more generous.
We believe this represents a just and final settlement Peter Hain, Work and Pensions Secretary
'Too bureaucratic'
Under the proposals, workers will now be entitled to 90% of their expected pension, and not the narrower "core pension" protected under the original terms of the FAS.
The Financial Assistance Scheme (FAS) is the official safety net for people whose pension schemes collapsed between January 1997 and April 2005.
Payments will increase in line with inflation, and will be paid from each failed scheme's normal retirement age.
In addition, workers will be able to draw a lump sum, if appropriate, and those who are unable to work due to ill-health will be able to apply for an early payout.
Review
In March, the government's directing actuary Andrew Young was asked to report on the best way to use the assets of failed company pension schemes to make the FAS more generous.
The government promised to match any savings he identified.
This is brilliant news... I will now receive what I was due Peter Jackson, Pensions campaigner
The Young Review, now published, says bringing the residual pension assets under government control, coupled with the guarantee of extra state help, makes boosting the FAS to PPF levels affordable.
It takes the government's total financial commitment to £12.5bn.
"We believe this represents a just and final settlement," said Mr Hain.
"Although the government has been criticised over this matter, these are huge amounts and it is right that we have been able to maximise the return from residual assets in the schemes which collapsed so that the public purse has had value for money too," he added.
'Brilliant news'
Campaigner Peter Jackson, who lost his pension when the firm where he had worked for 41 years went into receivership, said he was "delighted".
Under the original terms of the FAS, Mr Jackson, who met Mr Hain before Monday's announcement, would have been paid a pension worth between 10% and 12% of what he had expected.
"This is just brilliant news," he said.
"I will now receive what I was due, which is a huge difference to what I would have received if the government had not acted."
Shadow pension minister Chris Grayling told the BBC he welcomed the announcement.
"It's a real tribute to the efforts of all the campaign group who have fought up and down the country over the last few years," he said.
"Well done to my counterpart, Peter Hain, whose clearly won a tough battle in government over the Treasury and over Gordon Brown, who didn't really want this package to go ahead," he added.
The Community trade union, which took the government to the European Court of Justice over the issue, also reacted positively.
"Christmas has come early... it's really good news," general secretary Michael Leahy told the BBC.
"Peter Hain... realised that this needed to be sorted out and he's done that, so we congratulate him for that," he added.
Discrepancy
The Financial Assistance Scheme (FAS) was designed to offer a safety net to people whose pension schemes collapsed between January 1997 and April 2005.
The Pension Protection Fund (PPF) covers members of pension schemes that have gone under since then.
The Pension Protection Fund (PPF) covers members of pension schemes that have gone under since then.
Despite various concessions since being designed, the FAS was significantly less generous than the PPF.
Despite various concessions since its inception, the FAS was significantly less generous than the PPF.
It paid out 80% of a worker's "core pension", subject to a cap of £12,000 - due to be raised to £26,000 - and had no inflation proofing.
The Parliamentary Ombudsman, Public Administration Committee and a High Court Judicial Review all criticised the terms of the FAS, and called on the government to offer greater compensation to the affected workers.
If this is a meaningful package that finally sorts this out, it will be really, really good news Ros Altmann, Pensions Action Group
Last week, Gordon Brown said he was confident the level of compensation for those reliant on FAS would be improved.
In contrast, the PPF pays 90% of a more generous pension entitlement, again subject to a £26,000 cap and has some inflation proofing.
His comments followed reports of clashes between the prime minister and the Treasury on one side and the Work and Pensions Secretary on the other
Peter Jackson had worked for the same company for 41 years when it went into receivership and his pension was lost.
He told the BBC: "I was facing the possibility of getting 10% to 12% of my original pension.
"We decided that wasn't good enough and with the help of the union Community we took them on and went all the way to the European court."
It was after Mr Jackson's court battle that the PPF and later the FAS were created.
Long wait
The FAS has been criticised by pension campaigners for being too bureaucratic and not paying out enough.
But one leading critic said the government may finally have acknowledged that the current situation was "unacceptable".
"If this is a meaningful package that finally sorts this out, it will be really, really good news," said Ros Altmann, head of the Pensions Action Group.
"I hope that we will be in a position to say this at last might deliver real hope to the people who have been so wronged."
Mr Hain admitted to BBC Radio 4's Today programme that some people had waited a long time without any help after schemes had collapsed.
"Look, I don't say we have done this as quickly as everybody would have liked. I'm not pretending that," he said.
"But I do think people will see that the announcement made today does address this issue, providing much needed justice for these pensioners."
Last week, Prime Minister Gordon Brown said he was confident the level of compensation for those reliant on FAS would be improved.
The latest announcement of more financial help comes after reports of clashes with the prime minister and the Treasury on one side and the Work and Pensions Secretary on the other.
But a Work and Pensions spokesman has dismissed the reports, saying there had been detailed discussions.
But a Work and Pensions spokesman has dismissed the reports, saying there had been detailed discussions.
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