MPs back pension compensation plan

The Conservatives are to join forces with the Liberal Democrats and a large group of Labour backbenchers to force the Government to pay compensation to around 60,000 people who lost much of their pension savings when their employers went bust.

The pensioners affected plan to lobby Parliament on Tuesday to coincide with the second reading of the Pensions Bill.

They are pressing for an amendment to the Bill, which will give compensation to up to 60,000 people hit by an anomaly in the previous pensions legislation. This meant they lost their entitlement to much of what they were due in final salary schemes that had been wound up.

An amendment to give full compensation is to be proposed by Kevin Brennan, Labour MP for Cardiff West, who has many constituents who lost out after the collapse of steelmaker ASW.

An early day motion supporting his stance was signed by 248 MPs but did not get the backing of either the Government or the Conservatives due to concerns about the cost, which could run into billions of pounds.

However, David Willetts, the Tories' spokesman on work and pensions, said they were willing to support a watered- down version of Mr Brennan's proposal.

"We will be tabling an amendment to enable the pension protection levy to provide retrospective compensation," he said.