Fury at 'great pensions robbery'

BRITAIN'S biggest private sector union today called on Prime Minister Tony Blair to tackle the flood of blue-chip companies dumping their final-salary pension schemes.

Roger Lyons, general secretary of Amicus, described the rush to close generous final-salary schemes as 'a silent revolution' that would lead to mass poverty in old age for the next generation of working people.

The demand for action came as Nationwide Building Society was revealed as the latest major employer to axe its final-salary scheme for new recruits, following in the footsteps of Lloyds TSB, Sainsbury's, Abbey National, Marks & Spencer and a host of other companies.

In a letter to Blair, Lyons called for a modification to FRS17, the new accounting rule, that will soon force companies to put future pension fund liabilities on their balance sheets.

The rule has undoubtedly hastened the demise of many final-salary schemes, though the real drivers are increasing longevity and expected lower investment returns.

'If the Government does not act to protect occupational pension schemes the next generation of working people face certain poverty in their old age,' said Lyons, describing the shift to cheaper money purchase schemes as 'the great pensions robbery'.

Lyons, who represents more than a million members, called on Blair to tighten up the law to give employees more protection against cuts in pensions. There is particular fury that some employers - including Iceland and Ernst & Young - are axing final-salary schemes not just for new recruits, but for existing staff too.

Lyons wants pension benefits to be brought fully within the scope of employment contracts and for them to be established decisively as covered by trade union recognition and negotiating procedures. He also called for pensions to be protected when companies are taken over.

'We do not imagine that these changes will in themselves prevent changes in pension provision taking place. We do, however, believe they will ensure that changes take place after proper notice for employees, after consultation and, hopefully, after agreement,' he said.

Amicus, the product of the merger of the MSF manufacturing and finance union with the AWEU engineering union, is the biggest union donor to the Labour Party, last year giving £2.5m.