Steelmen sue Government on pensions

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The steelworkers union ISTC is gearing up to sue the Government under European law for failing to help save the pensions of thousands of workers in insolvent companies.

Michael Leahy, general secretary of ISTC, will today reveal plans to use the European insolvency directive to force the Government to compensate workers that have seen their pension entitlements all but wiped out when their employer went bust. "It is an absolute travesty that people who have paid into a pension fund for over 40 years with an expectation of a reasonable pension at the end of it have had that snatched away from them," Mr Leahy said on BBC Radio 4.

"What we want is redress for [the] thousands of workers that have been affected previously and we will do all in our power, however much it costs, to redress that issue."

Workers in the now defunct United Engineering Forgeries and ASW are facing pensions that are as much as two-thirds below what they are entitled to, despite having paid into the scheme for nearly four decades. Only employees who have already retired are entitled to receive their full payments if their former employer becomes insolvent. The pension fund assets are then shared out between current workers with no regard for how long they have paid into the scheme.

The Government has so far said it can do nothing to help the steelworkers, but the union believes it is in breach of the 1980 European solvency directive. This requires member states to ensure that there are necessary measures in place to protect employees in relation to their pension rights.

Plans to set up a compensation fund were recently announced by the Government that would bail out the pension schemes of companies that go under. There are no proposals, however, to make the fund retrospective. ISTC will meet Andrew Smith, the Secretary of State for Work and Pensions, in September. The union hopes a settlement for ASW workers can be reached, but says it is prepared to go through with court proceedings.