[A-List] UK legitimation crisis: pensions

["Michael Keaney" <michael.keaney@xxxxxx>]

£50m deficit revealed in shipyard workers' pension fund
SIMON BAIN and BILLY BRIGGS
The Herald, 25 November 2002

WORKERS at a Scottish shipyard have been told that the industry's pension
fund has a "black hole" of around £50m.

The deficit has triggered fears among shipbuilding workers across Britain
that their pension scheme could be wound up.

A newsletter at the Yarrow yard warned there would be an announcement next
month on the future of the Shipbuilding Industry Pension Scheme, an
industry-wide final salary scheme run by the shipbuilding employers'
federation.

The Scottish shipbuilding industry employs 10,000, with Fergusons at Port
Glasgow and Yarrow the surviving yards on the Clyde, while the UK industry
employs 25,000.

Employees now fear that the £50m deficit, caused by plunging stock markets
and a failure by employers to plug the gap, could force the scheme into a
wind-up. That would leave workers close to retirement highly vulnerable to a
disastrous cut in their retirement income. Current legislation gives
existing pensioners first call on pension assets in a wind-up and does not
protect future pensioners.

The flaw in the law has been the subject of growing political pressure since
800 former steelworkers at ASW in Cardiff saw up to 80% of their pensions
disappear in the wind-up of their fund after the company itself went into
receivership in July.

One week ago, Andrew Smith, pensions secretary, when pressed on the issue by
BBC TV's Panorama programme, admitted that there was a serious problem, but
in a speech last Wednesday he said pensions overall were working well and
gave no hint of any changes to the law.

Nearly half of all workers in final salary pensions are worried about the
future of their scheme, according to new research. Around 46% of people are
concerned that the scheme will not continue in its current form, with 19%
worrying it will close and 27% expecting their future benefits to be greatly
reduced. Just 42% of staff who are members of a final salary pension expect
it to remain in its current form until they retire, according to Jupiter
Asset Management.

There are increased fears that millions of people may be facing severe
financial hardship in retirement after a spate of recent reports casting
doubts on pension schemes' ability to offer decent incomes. Some politicians
have called for the state retirement age to be raised to 70.

A recent report from the Association of Consulting Actuaries (ACA) said the
final salary pension scheme was in danger of extinction, with half now
closed to new entrants. The ACA said one third of employers were reviewing
their schemes, and half were trying to reduce their liabilities.

One third had already reviewed their arrangements in the past year and 42%
said they wanted to cut costs.