UK - The government is facing a test case over whether it is liable to pay the pensions of employees with insolvent employers.
If the case succeeds, the government would be forced to pay compensation worth billions of pounds to employees left out of pocket when their pension schemes were wound up in deficit.
The Iron and Steel Trades Confederation is preparing the test case on behalf of members of the £119m ASW Pension Plan whose 3000 members are facing cuts of up to 90% in their pension entitlement.
The claim is based on the 1980 European Insolvency Directive that instructs member states to provide measures to protect the interests of employees and ex-employees after insolvency in respect to old age benefits.
The question the ISTC is posing is whether the government has implemented this directive through measures such as the minimum funding requirement and the national insurance fund.
A leading lawyer said it was only a matter of time before such a case was brought against the government.
Denton Wilde Sapte partner Elmer Doonen said: “It strikes me that the government’s measures to protect scheme members in company insolvency don’t seem to fit the bill.
“If that is correct people could feasibly make a claim against the government for their losses.”
But the department for work and pensions says the 1980 European insolvency directive covers holiday pay and not pensions.
*ASW members are also considering other legal avenues to regain some of the cash lost from their pensions pot.
These include taking action against the scheme actuary and – more radically – suing the US government for its role in taking ASW into receivership through tariffs to protect its industry.
Scheme member John Towill said: “We would go down any route we can to help us get our pensions entitlement.
“Suing the government is one of a number of potential avenues we will take.”
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