The Department for Work and Pensions (DWP) has issued a statement after a group of hundreds of people are said to have had their pension payments significantly reduced. John Benson, 78, was a steelworker until he was told in 2002 that the company he’d worked for for more than 40 years, Allied Steel and Wire (ASW) in Cardiff, had gone bust.
John told Wales Online: “I remember vividly walking into [my wife] Linda devastated I’d lost the job but I remember saying to her: ‘Linda, we’ll be fine. My pension is there and we’ll be fine.’” But it wasn’t fine.
Just a week later, John was told ASW was in such a bad way financially that there’d be a significant shortfall in the pension scheme, too. His pension, he says he was told, would need to be reduced by 85%.
John said: “So many people, even journalists, have come to me since saying: ‘How on earth can this have happened John? Surely your pension is sacrosanct.’ That’s what I thought too. Honestly it nearly killed me. I nearly lost my marriage fighting this. I’ve been hell to live with.”
More than 800 people who also worked at ASW found themselves in the same position. Many of them were men of a similar age to John and were facing a bleak end to their lives through no fault of their own.
John believed he’d continue to work happily in steel, as his father had before him, until he was 65 and then he’d planned to enjoy a wealthy retirement with the ability to support his granddaughters through university. But it all changed the day he was told he’d lost his pension. He got a job on the tills in a supermarket before litter-picking for Cardiff council to make ends meet.
John recalled: “Don’t get me wrong, they were fantastic people litter-picking with me for the council – really good down-to-earth people. But I never thought I’d end up there when I should have been retired. I thought I was set for life. I should have had a fantastic retirement.
“I should have supported my grandchildren through university and taken them out and helped them and taken my family on holidays but I couldn’t. When I sit and think about it all it’s heartbreaking. It’s been my life now for 22 years.
“What have I done, what have we done, to deserve this? We don’t deserve this. We did nothing wrong and we played by the rules. That was our money that was paid in willingly and trustingly every month. I knew that working in the steel industry there was a possibility I could lose my job. But to lose my pension?”
John decided to mobilise a small group of colleagues from ASW and they are still going strong today under the name Pensions Action Group, campaigning to receive the money they are owed in full. He explained: “In the early days I was going up to London to have meetings with politicians at Westminster and they wouldn’t pay me any expenses so I was going up there on the 4am train because it was the cheapest and the one I could afford.
“I was getting into London at 7am and having to hang around all day to have a meeting. We did everything. We’ve campaigned all over the UK and we got some of our money back but it turned out we were shafted then too.”
Following Robert Maxwell’s 1990s misappropriation of more than £400m from the Daily Mirror staff pension fund two new bodies were formed to protect workers’ pensions. One of them, the Financial Assistance Scheme (FAS), would help people who lost some of their pension because their scheme ended between January 1997 and April 2005.
Usually this was because an employer went bust and the scheme was underfunded like ASW’s was. After April 2005 the Pension Protection Fund (PPF) stepped in. For those with modern defined contribution pensions the scheme is protected by the Financial Services Compensation Scheme.
Since being formed in 2004 the FAS has taken on more than 1,000 schemes and in 2007 ASW became one of them. It worked out what those affected would have received from their pension and paid them 90% of that amount.
John remembers of the group’s 2007 deal with the FAS: “We all thought it was a bloody good start. It felt like a breakthrough – like we’d got someone to listen. But then we realised it was pretty flawed.”
It transpired the FAS did not pay inflation-linked increases above 2.5% after 1997 and for money owed for the time worked before 1997 it didn’t pay any inflation-linked increases at all. The ASW pension indexation rate was at 5% when the company went bust.
For John, who worked for 36 of his 41 years pre-1997, it means of the pension right he built up across those 36 years he will never receive an increase. Effectively he says the 90% figure they were promised was a “mythical figure” and they ended up receiving a fraction of the money they were owed.
His pension, as it stands, will always be £13,750 annually – significantly less than what he would ordinarily have been owed had ASW not gone bust. He said: “In reality I’m owed £26,500 annually.
“That’s what my pension would have been had ASW continued operating. So I’m owed more than £200,000. We quickly realised the deal we got wasn’t a good one. It was really hard to take.”
John says while many of his former colleagues have died others seem to have lost interest since 2007. Yet John fights on.
“I’m not giving up. I can’t give up. Too many colleagues who fought so hard have died without seeing that money. I’m still fighting not just for me but for their memories and for their families. They were fantastic people – always there. I’ve got to see this through for them now too.”
Issuing a statement, the DWP said all pensions legislation was kept under review but confirmed there were no plans to change FAS legislation. A spokesman added: “It is important to ensure the pension protection system remains financially sustainable while we carefully balance our duty to the public purse and support those who would have been worse off if the FAS were not available. The FAS was never designed to provide a complete replacement of lost pensions. The scheme ensures that most members get standard assistance based on 90% of the pension benefits they accrued when their scheme started to wind up.”
John says: “I want someone in government to say to me: ‘You’ve been wronged and you deserve these pensions.’ I just think Westminster ministers have had enough. We’ve just had our meeting cancelled with the pensions minister and that’s the third meeting they’ve cancelled in a row with us. It seems they wiped their hands with us. But I’m not going anywhere.”