By Frank Field MP Chairman of the UK Pensions Reform Group

My correspondent's email was remarkably dignified. Dignified even though, after 31 years of loyal service, he has found out that he is to receive no pension.

No sector of the economy is immune from the pensions crisis. Frank Field MP

His crime was not that he did not join the company scheme, nor that he had always opted for jam today. In fact, for most of his career, membership of the company scheme was a condition of employment. And he has paid his dues.

This all sounds like a Maxwell type horror story. In fact this is a real case of a company pension that is currently 'winding-up' - closing up shop altogether in other words.

It is all legal, and I chose the example of the City firm because it shows that no sector of the economy is immune from the pensions crisis.

I guess that for most people reading this article, the so-called 'winding-up' was previously a subject best left to the anoraks' debates in the Faculty of Actuaries.

Life savings 'down the drain'

But that all changed with the closure of the Allied Steel & Wire (ASW) company's scheme.

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Workers for that company were told that, because of the way assets were to be shared out in accordance with the Pensions Act 1995, those people who were already receiving their pension would come top of the pecking order.

Only once they have had their slice of the cake would those people yet to retire get thrown the crumbs.

The ASW workers came to my office to lobby me. Having worked for 30 or 40 years they were facing a 50% cut in their pension.

Plans to pay off the balance of the mortgage with their tax-free lump sum had to be scrapped.

One or two had faced up to the fact that they would now have to sell their home to pay for their retirement. Before the meeting I had already decided to introduce a backbench Bill and rally support in Parliament.

Urgent issue

I have introduced the Pensions (Winding-Up) Bill because of both the unfairness and the urgency of the problem.

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The Secretary of State for Work and Pensions, Andrew Smith, has only been in his job for eight months and cannot be held to account for the growing pensions shambles.

But the complacency of the years before he was appointed is now all too apparent. A quick look at the overlap between the 1998 and 2002 green papers proves the point.

On a whole series of proposals, the two green papers are virtually identical, despite four turbulent years for occupational schemes.

Constituents are bringing their pensions worries before MPs in ever-increasing numbers.

Winding-up bill

In the past month I have had nearly 200 letters from people who feel the pensions promise is about to be broken. One theme that stands out is the fear and anger felt over winding-up.

It is a scandal that up to 15 per cent of some pension funds are disappearing into lawyers, actuaries and professional trustees' pockets during winding-up.

The Pensions (Winding-Up) Bill has four main aims.

First, the Bill proposes a new basis for sharing the scheme's assets. If a scheme is under funded then everyone will feel the pain in proportion to his or her entitlement. Why should all the pain be felt by non-pensioners?

Next, the Bill also goes further in requiring the government to come up with proposals for an insurance scheme for funds so that any scheme winding up below a set level of funding would be topped-up.

Two further measures complete the Bill. It is a scandal that up to 15% of some pension funds are disappearing into lawyers, actuaries and professional trustees' pockets during winding-up.

Until 1988 it was often a condition of employment to join an employer's scheme.

Often this is in return for a painstaking process of reconciling records that might result in tens of thousands of pounds being spent on changing entitlement either way by a few pence. So the Bill will propose a way of limiting these fees.

Politicians' responsibility

Finally, when the workers of ASW assembled in my office to make their case they made the point that until 1988 it was often a condition of employment to join an employer's scheme.

They argued that politicians have a special responsibility to those who have taken such a hard hit from winding-up.

The current Secretary of State has a chance to distinguish himself by moving quickly to extinguish the pensions bonfire.

In view of this, the Bill will permit the government to fund a compensation scheme by making a limited levy against the vast amount of unclaimed assets held on the "Unclaimed Assets Register", many of which date back to the 19th century and have nil chance of ever being claimed by their rightful owner.

The current Secretary of State has a chance to distinguish himself by moving quickly to extinguish the pensions bonfire.

Frank Field MP is chairman of the Pensions Reform Group and the former Minister for Welfare Reform.