New voice calls for reform in pension law

Click to follow
The Independent Online
EMPLOYEES and pensioners have insufficient legal powers to defend their occupational pension scheme rights, a new pensions organisation claimed this week, writes Andrew Bibby.

About 300 people attended the inaugural conference of the Charter for Pension Fund Democracy, an alliance of employee pension fund trustees, trade unions and pensioners' action groups.

The conference endorsed a seven-point list of pension reforms, including demands for the majority control of pension funds by employees' representatives and for clearer separation of pension fund assets from those of parent companies.

'We are not only concerned about stopping another Maxwell, we are concerned that there should be a fundamental shift in the balance of power and control over pensions from employers to pension scheme members,' Roger Lyons, general secretary of MSF, the white-collar union, said.

'Pensions are the last area of feudalism in our society.'

According to the group, the pensioners of Robert Maxwell's former companies have not been alone in facing difficulties. It has drawn up 19 case studies it says identify issues of concern. While there is no suggestion that these examples involve illegality, the group argues that they illustrate the need for changes in the law.

One problem identified is the imposition of changes in pension arrangements or benefits after company takeovers. The conference heard from staff of the engineering firm APV of the benefit changes introduced unilaterally by the company after its 1988 takeover of the Baker Perkins group.

There is also a rising tide of difficulties caused by company insolvencies. The group claims that pension fund members at Belling, the cooker and engineering company that failed recently, face an uncertain future as a result of a pounds 5m purchase by the pension fund of a Belling subsidiary and a further pounds 2m loanback to the parent. The pension trustees were all Belling directors.

Privatisation is affecting public sector employees' superannuation arrangements. Staff who left the NHS when a division of the West Midlands Regional Health Authority was privatised in a management buyout in 1990 lost a large part of their accrued pension rights after their new company, QA Business Services, went into receivership a year later.

At the time QA was established, its pension scheme mirrored the NHS superannuation arrangements, and about 200 staff transferred to the new fund. However, QA's pension fund was not guaranteed by central government and its value fell from a pounds 1.25m surplus to a pounds 2.2m deficit in a year.

'In my case, 24 years of pension contributions are now worth the equivalent of only eight. There should be some form of compensation scheme for pensions as there is for other financial investments that go wrong,' Malcolm Carmichael, a former QA employee, told the conference.

Whether a compensation scheme is needed for occupational pensions is one of a number of proposals for change that the government-appointed Pension Law Review Committee, chaired by Professor Roy Goode, will consider.

The Goode committee is holding the last of three public meetings in Birmingham on Wednesday. Admission is free by ticket, available from 071-233 7474. The deadline for public comments and submissions to the committee is 15 December.

Charter for Pension Fund Democracy, c/o PIRC, Challoner House, 19-21 Clerkenwell Close, London EC1R 0AA. Individual affiliation pounds 5.

Looking for credit card or current account deals? Search here

Comments