The ASW plant in Cardiff closed in 2002

The UK Government has said it is trying to find a way to compensate former steelworkers who lost their pensions when their company collapsed, on the day the ex-workers lobbied MPs at Westminster.

Welsh Secretary Peter Hain has been discussing the pension crisis at Allied Steel and Wire (ASW) with the Chancellor, Gordon Brown, and the Work and Pensions Secretary, Andrew Smith.

Mr Hain said they were trying to find a way of compensating the ASW workers without having to compensate victims of financial scandals in a way that would cost hundreds of millions of pounds.

More than 800 ASW workers in Cardiff lost their jobs and pension entitlements when the company collapsed in July 2002.

Mr Hain said what had happened to the ASW workers was outrageous, but the Government could not open up the taxpayer to a massive cost.

After working for ASW for 32 years, to be made redundant and then finding my pension had gone was a bitter blow ASW worker Brian Silver

Former workers at ASW have travelled to Westminster on Monday, where the Pensions Bill, prompted by the ASW pensions crisis, is being debated.

The Cardiff workers say retrospective compensation for the loss of their pensions should be included in the bill.

Members of the ISTC and Amicus unions formerly employed at Allied Steel and Wire (ASW) have timed the protest to coincide with the second reading of the bill.

The bill will, if passed, set up a pension protection fund to help guarantee workers their pensions even if their employer goes bust.

But former ASW workers are unhappy that they will not benefit from the new legislation and are calling on ministers to make it retrospective.

One ASW worker who lost 80% of his pension, Brian Silver, said he would have to work for years beyond his planned retirement date.

ASW workers have staged protests over the loss of their pensions

"After working for ASW for 32 years, to be made redundant and then finding my pension had gone was a bitter blow," he said.

"I was expecting to get �12,000 - �14,000 per annum, but now I will probably get only 20% of that.

"I now might have to work until I'm about 70.

"It is going to be very difficult because there is no way I can now put enough money aside to secure my future."

Court fight

Cardiff West MP Kevin Brennan has tabled a motion calling for government compensation, which 240 MPs have signed.

Union leaders claim that confidence in the UK pensions system will not be restored unless they, and people in similar positions, are compensated.

The unions which represent the Cardiff workers are already taking the UK Government to court for failing to protect their members' pensions.

But Mr Silver added: "We are looking to persuade the government, instead of taking them through a legal situation that will cost the union and the government as well."

Derek Simpson, Amicus General Secretary, said workers who had lost their pensions should be compensated retrospectively.

"Amicus members at ASW, and other companies such as UEF, were told that their final salary scheme was secure but now they've lost almost everything.

"Successive British Governments have failed to adequately implement a European law that would have prevented this and, whilst we welcome the Pension Protection Fund, those who have lost out must be compensated."

Under the new legislation to be debated on Tuesday, a protection fund would be set up to cover schemes that go bust.

Money will be taken from a levy on all pension schemes.

Earlier Pensions Minister Malcolm Wicks told BBC Wales that the Bill published last month was not retrospective.