LONG-SERVING workers will not lose out if their employer goes bust, under changes to the pensions system announced yesterday.
At the moment, a worker’s length of service is not taken into account when a defined benefit pension scheme collapses and is transferred over to the state-backed Pension Protection Fund.
Under the rule change, unveiled by Lib Dem pensions minister Steve Webb, the compensation cap will now be increased by three per cent for every year of service over 20 years. As a result, many pensioners stand to gain thousands of pounds.
The decision was warmly welcomed by Hargreaves Lansdown pensions expert Tom McPhail: “It’s a fairer deal for longer serving members of schemes, it’ll bolster confidence and reduce the risk of long serving members opting out.”