January 25, 2007 04:57 ET

Unions win landmark pensions case

LONDON, UNITED KINGDOM--(CCNMatthews - Jan. 25, 2007) -

Attention: Industrial, political, business, pension, personal finance and legal correspondent

Thousands of workers are celebrating today after the European Court of Justice (ECJ) ruled that the UK government has failed to properly implement European law and so could be entitled to full compensation for their lost pension savings.

In the case brought by Amicus and Community unions on behalf of 1,000 members formerly employed by Allied Steel and Wire (ASW) in Cardiff and Sherness, the court found that successive UK government's have failed to properly implement the European Insolvency Directive which should have been in effect since 1983.

Now the UK courts could rule that workers should be fully compensated for losing all or substantial parts of their pensions after their employer's went bankrupt. The case now has to be referred back to the UK High Court which will decide if the breaches are significant enough to make the government pay full compensation to thousands of victims of company insolvency.

Derek Simpson, Amicus' General Secretary, said today: "This judgement vindicates our decision to take this case all the way to the ECJ. We have consistently said that we will defend our member's rights on pensions and this case demonstrates that successive governments have failed workers who have heeded their advice to save for their retirement.

"We are confident that when this case returns to the UK High Court, our arguments will be upheld and our members who, through no fault of their own, lost all or substantial parts of their pensions, will be fully reimbursed. It is also a vital judgement in restoring peoples faith in the pensions industry. In order to save sensible and throughout their working lives, people need to be reassured that their money is safe."

The outcome of this case could also have a bearing on the Pension Protection Fund (PPF) set up by the government to protect workers' occupational pensions in cases of insolvency. Currently PPF is not retrospective and only covers people affected from May 2005 onwards. It also sets limits at 90% of people's lost pensions and a cap of Pounds Sterling 26,000 which could be deemed illegal.
In the region of 125,000 workers are thought to have lost their savings through the insolvency pension's trap.

Julie Morgan, MP for Cardiff North has tabled an amendment to the Pensions Bill calling for 100% compensation. She has also tabled an Early Day Motion calling on the Government to ensure that those who lost their expected pension due to employer insolvency receive the pensions they saved for.

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Note to editors

1.The union's case challenged the UK Governments', past and present, failure to implement a 1980 European Directive, which should have been in place by 1983. The Directive requires member states to take measures to protect the occupational pensions of employees in the event of their employer's insolvency.

2.Amicus and Community issued a High Court claim on behalf of 1,000 pension scheme members of Allied Steel and Wire Ltd (ASW) from Cardiff and Sheerness who lost the bulk of their pensions when the company was declared bankrupt in 2002, leaving two pension funds in deficit.

3.Article 8 of the European Insolvency Directive reads:

"Member States shall ensure that the necessary measures are taken to protect the interests of employees and of persons having already left the employer's undertaking or business at the date of the onset of the employer's insolvency in respect of rights conferring on them immediate or prospective entitlement to old-age benefits, including survivors' benefits, under supplementary company or inter-company pension schemes outside the national statutory social security schemes."

Contact Information

  • Amicus
    Brian Gallagher
    07957 995 947
    Catherine Bithell
    0207 240 8909
    07958 473 224