Government faces legal action over company pension protection
The Government is being taken to court by the Amicus union for failing to protect the value of its members’ pensions when their companies went under.
Amicus is taking the Government to the European Court of Justice on behalf of its members who worked at United Engineering Forgings (UEF) in Bromsgrove and at Allied Steel & Wire (ASW) in Cardiff.
ASW went under in 2002 laying off 800 employees whilst UEF made its 100 employees redundant in 2001. As a result of the companies going into receivership the employees lost around 90% of the value of their pensions funds that they had been paying into for years.
The union is expected to claim in court that the British Government in the early 1980’s failed to implement a EU Directive by 1983 that protects employees pension funds when companies go into receivership.
The union believes that the Government’s failure to properly implement the directive has left members at companies such as ASW and UEF facing a retirement in poverty despite following advice to save for their retirement through their company pension schemes.
Amicus Joint General Secretary, Derek Simpson, commented, ‘Workers in companies such as UEF and ASW are facing massive pension shortfalls and although the government’s pensions green paper takes Amicus’ advice to have an insurance scheme to provide protection in the future, it means nothing to those people already facing poverty in retirement.’
‘At the moment, when an employer becomes insolvent the pension scheme in place is wound up. If there is a deficit in the pension scheme, members have little chance of getting the pension they’re entitled to.’
The Government announced earlier this month that companies would be required to pay into a pension protection fund that would insure the value of a company’s pension fund if the firm become insolvent.
If the case is successful a raft of similar claims are expected to come forward.
