In a growing phenomenon, members of occupational pension schemes such as ASW and Dexion have been finding their pension rights seriously diminished on insolvency of the sponsoring employer. Facing a backbench revolt over Government inaction to assist these workers and pensioners in the period prior to introduction of the Pension Protection Fund, the Secretary of State for Work and Pensions (Mr. Andrew Smith) wriggled off the hook last Friday (14 May 2004). He informed the Commons that £400 million of public money would be made available to provide assistance in such cases, to be paid in instalments over 20 years with the possibility of further contributions from industry.

Hansard carries the wording of the amendment Mr Smith laid to the Pensions Bill currently before Parliament. This makes liberal use of the familiar phrase "as may be prescribed": it remains entirely unclear which members of which defined benefit schemes will qualify for assistance (eg. only post-5.4.88 joiners? only schemes which entered wind-up post-5.4.97?), how much they might get, and in what circumstances. Regulations detailing how this 'lifeboat' fund will actually operate are to follow "consultation with stakeholders", Mr Smith said, adding "we will review the operation of the fund in three years time."

There are signs that this "financial assistance scheme" might be merged with the Pension Protection Fund as soon as possible - which means that sooner or later the industry would end up paying for it. That might neatly address concerns already widely expressed that £400 million over 20 years won’t be adequate. Besides the ominous reference already quoted to "contributions from the industry", paragraph 3(g) of the new Clause states that the regulations may make provision for "conferring functions in relation to the financial assistance scheme on the Pensions Regulator or the Board of the Pension Protection Fund".