400,000 pensioners lose out as pension contributions before 1997 are not inflation-proofed despite pension funds having a £14.1 billion surplus
Unite has called on the government to use surplus reserves in the Pension Protection Fund (PPF) and Financial Assistance Scheme (FAS) to inflation-proof pensions. The two funds were set up by government to cover defined-benefit (final salary) pensions at companies which went bust.
Under current rules in both funds, pension contributions paid by workers before 1997 are not inflation proofed at all. That means that a retired worker whose pension was earned before 1997 is only getting 50 per cent of its value. For a worker with an average pension (value of £48,000) earned before 1997, inflation-proofing would increase the total value of the pension pot by at least £24,000.
400,000 retired workers in the UK have pensions held by the PPF or FAS which were earned before 1997. All would benefit from inflation proofing to a greater or lesser extent depending on years worked and pay rates.
There are currently 4,399 pensioners in FAS and 4,782 in PPF in Northern Ireland. This includes large numbers of former employees of Harland & Wolff, Wilson’s Feeds, Visteon, FA Wellworth and British Midland airlines, ECC, Lamont, James Mackie & Sons and Desmonds & Sons.
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