NB: THIS TRANSCRIPT WAS TYPED FROM A TRANSCRIPTION UNIT RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT: BECAUSE OF THE POSSIBILITY OF MIS-HEARING AND THE DIFFICULTY, IN SOME CASES OF IDENTIFYING INDIVIDUAL SPEAKERS, THE BBC CANNOT VOUCH FOR ITS ACCURACY. ....................................................... ................. PANORAMA How Safe Is Your Pension? RECORDED FROM TRANSMISSION: BBC-1 DATE: 17:11:02 ....................................................... ................. VIVIAN WHITE: Tonight, a failure of trust and a crisis which could leave millions poor in their old age because they wont risk putting money into pensions. An expert who advises Tony Blair tells us that governments left employees unprotected. DR ROS ALTMANN: I think it’s outrageous. I think it’s a scandal. WHITE: A crisis with a message for the young. Forget those dreams of early retirement, of living the lifestyle you have now without having to work. If you don’t save enough, they say, you wont retire at all. MARLENE SHALTON: They’ll probably have to keep working until they drop dead. I mean if that’s what they want to do, that’s fine. WHITE: The gaping loopholes in the law which have left people who’ve saved and saved without the money they’ve put into their pension. It’s a personal tragedy and it could happen to millions more. LINDA BENSON: I think it’s a disgrace, in fact I think it’s stealing. WHITE: This is the story of betrayal of prudent and careful people who believed their pensions must be guaranteed because it said so – and learnt the hard way that they weren’t. What does the word ‘guarantee’ mean to you now? GOLFER WOMAN: Not a lot. It’s not worth the paper it’s written on basically. WHITE: Tonight we investigate the crisis of confidence in pensions that affects us all. The Dinas Powis Golf Club, just outside Cardiff, the beginning of a journey for us, finding our way across a landscape full of unexpected insecurity. We’d come to Cardiff and the golf course because we’d heard an extraordinary story about a group of people who’d lost the company pensions that they thought were theirs by right, one of them a fellow called John Benson. VIVIAN WHITE [On the green] It’s John Benson’s turn now. Wilf says that John is devastated, as well he might be. He was looking forward to early retirement this year. What’s actually happened is he’s lost his job and he’s afraid he’s lost his guaranteed final salary pension too. JOHN BENSON I feel devastated to be honest with you and I’m devastated at what has happened. It’s just shattered my family and my son losing his job and all, the rug has been taken from under us and we just can’t contemplate the future anymore. How Safe is Your Pension? Final Salary Scheme 9.5 million members WHITE: John worked here at ASW – Allied Steel and Wire – known as one of the best employers in Cardiff with a thousand people making steel, and a pension scheme that looked like pure gold to go with it, a final salary scheme which paid out a pension linked to your earnings and how long you'd been paying in. JOHN & LINDA BENSON I knew that my pension was safe, I’d contributed to into it for 27 years, nobody have ever told me that there was a problem, so Linda and I decided that this year, because of all the heartache that we’ve had with losing our parents, that if there was a chance of retiring we’d retire, I had a good pension. WHITE: Sue and Gordon MacPherson both had jobs at ASW as well. Gordon had already been made redundant. Sue was still going in to work in the IT department there. But any day now she was expecting to be given her cards too. SUE MACPHERSON Golf is a great healer in some respects because you can go out there and just hit this little ball and think who’s head it is you'd really like to hit. WHITE: Why did you join ASW’s final salary pension scheme? SUE: Well mainly to provide for the future and not be dependent on the government pension, so that we could, hopefully, look to possibly retiring abroad. We both enjoy golf, and possibly use that in the future as our recreation and enjoyment really. WHITE: Did you think that was realistic? SUE: Yes, especially with the scheme as it was presented to us. WHITE: Did you check out the scheme? Most people don’t. SUE: Well I did, and I too independent financial advice and every adviser I spoke to said that ASW’s pension scheme was one of the best in South Wales, if not the best. WHITE: Then ASW, which had been so prosperous, got into trouble as market conditions in the steel industry worsened. But the employees still took comfort from knowing they’d got their pensions. In July the receivers were called in. When the company went into receivership did you and Gordon think that your pension was in any way at risk? SUE: No, not at all. We realised that a) we wouldn't have a job and b) we wouldn't be getting any redundancy, but as far as the pension was concerned, we thought that was solid. JOHN BENSON: I came home, I told Linda, I’ve lost my job. She said: “What are we going to do?” I said: “Well we’re okay, we have to sort the pension out but I don’t think there’s a problem with the pension.” WHITE: And then ten days later he came in, opened the door and he had a different message for you. LINDA BENSON: Yes – there’s no pension. Well I just went mad. I said: “What do you mean ‘there’s no pension’” I said: “There’s got to be a pension” I said: “You've paid into that pension scheme and it is your money. Why can’t you have that money?” And John’s words to me were: “I really don’t know.” JOHN: If this pension is gone, I said I don’t know what we’re going to do, we’re in trouble. WHITE: They were in terrible trouble. Their pension fund was to be wound up, and worst of all, when it came to paying out, those who were still working when the firm shut up shop were at the bottom of the pile for getting their money back. And this was in a final salary scheme, traditionally regarded as the most reliable and secure type of pension. Was ASW unique or part of something bigger? Well that was why I was at Cardiff Central Station willing a late train to arrive because well it just seemed as if you couldn't spend a day without more bad news about pensions piling up. So call in the expert. We invited down a major pensions player, Doctor Ros Altmann who pops in and out of Downing Street giving the Prime Minister advice. We wanted to find out how she saw ASW and the wider picture. £27 billion shortfall in pensions savings [Vivian greets Ros at station] WHITE: And almost the first thing she had to tell me was that w should all be saving more and starting earlier, that there is this huge gap between what we are putting into pensions and what we should be, £27 billion on one estimate, to pay for all those extra years we’re going to live. Dr ROS ALTMANN Independent Pensions Adviser To the Government You're living longer so you're going to have to live on whatever you've saved for a lot longer, and that seems to me to be unrealistic. To expect that you can contribute to a pension for say 30 years, and then live on any savings that you've accumulated from that pension for 35 years or 40 years, the maths don’t stack up. It cannot be done. WHITE: We’d already met lots of families hit by the ASW affair, and their friends, to talk about their pension. So we invited them, and our expert, Dr Altmann, to a Panorama pensions night out in Cardiff, a mini pensions road show. The doctor’s first unpleasant duty was to hand out clinical calculations of just how bad many people's situations were. ALTMANN: I reckoned it would be about £6,700 by the time you're 60 which would give you a tax free some of money, if you wanted to take it, of about £1,680 and an inflationary pension of £350 a year, £7 a week, which is nothing. You'd still be needing to put in an extra £220 a month at least to actually get that sort of pension. Is that a sort of figure that you could even think of putting in? MAN: No chance. ALTMANN: No chance. MAN: No, well, not the money I’m on. ALTMANN: If you were to retire at 60, that should give you an index linked pension of around £1600. It’s not a lot. WHITE: Dr Altmann, who gives advice to Downing Street, saw the men and women from ASW as innocent victims of a failure of policy. ALTMANN: I think it’s outrageous. I think it’s a scandal. It really is absolutely unacceptable in my opinion that people can have worked and contributed to their company’s pension scheme for all that time and end up with nothing. WHITE: We’ve been told down in Cardiff that people don’t trust pensions, they don’t think they’re safe. Well we’re just about to speak to the Secretary of State for Pensions, Andrew Smith, and he’s said in Whitehall to be a ‘safe pair of hands’ so we’ll see how he’ll deal with it all. People tell us it’s outrageous what happened there, a scandal at ASW. ANDREW SMITH, MP Secretary of State for Work & Pensions Yes, and I can very well understand how they feel like that. People are dependent on their pension and one day they think things are fine but the next day they find that it’s not. That is an awful shock. WHITE: John Benson and all the other men and women at ASW, Cardiff, were in a final salary pension scheme that they thought promised security in retirement. Now over 9 million people in the UK are in schemes like this. Are they safe? Are you? Am I? JOHN BENSON I think we’re all part of the same thing. It’s not only ASW, you read in the papers now, it’s on the television, pensions are in crisis and people.. it’s not a very nice word to say Vivian but people are being ripped off and it’s destroying families. WHITE: Do you think that’s what’s happened to the men and women at ASW can happen to other people too in their final salary pension schemes? Dr ROS ALTMANN Independent Pensions Adviser To the Government Absolutely, absolutely 100% certain. What has happened to ASW is not a one off. Any scheme is at risk from this, and even if your scheme is so called ‘fully funded’ that doesn’t guarantee you - unless you've actually retired – anything at all. WHITE: John was in a final salary pension scheme. His son, Mark, worked for a sub contractor to ASW so he lost his job as well, but not his pension. His son had a different type of pension altogether with a different and more obvious sort of risk, a personal pension. How Safe is Your Pension? Personal Pension 4 million members Nice, eh. We’re out here by this big, shiny truck out at a disused airfield near Cardiff because the guy who is driving it is Mark Benson and his father, John Benson, he lost his job at ASW and Mark was affected too, and now he’s looking for other work. So we thought we’d have a word with him. Hi Mark, what did the word pensions mean to you? What did it mean to you almost in a word, before all this happened? MARK BENSON Saving for the future, for my retirement, so I could have a better standard of living when I retire. WHITE: Mark’s being taught to drive heavy trucks to get his HGV licence, and his teacher in the cab is Tricia. TRICIA: Now check in your right hand mirror as you're coming across, check in that right hand mirror as your trailor is coming behind you, keeping a good eye on those cones, so you don’t hit them over. WHITE: He’s one of four million people who’ve taken out a personal pension. But the pay out depends on the state of the financial markets. The individual takes the risk. Mark had been earning 19,000 a year and putting £40 a month into his personal pension. But he wasn’t impressed. With the markets in poor shape, it’s hardly grown at all. MARK: I was hoping to have a nice little nest egg off the pension but whether that comes about or not I’ve no idea. Basically you can’t… there’s no trust with them. What’s the point of putting any money into a pension? WHITE: He hasn’t got a job at the moment so Mark stopped paying in to his personal pension, but he’s not sure whether he’ll start it again in any case. His partner Ruth has a part-time job but no pension. RUTH & MARK RUTH: We must have a pension, we must save for our future, but at the moment, no, we just don’t know, it’s uncertain. MARK : It’s trusting someone with your money at the end of the day and I don’t think I’ve got that trust. WHITE: And trust is in rather short supply at Cardiff we found. [reading pamphlets] “About to retire – what next?” “Everything you need to know about stakeholder pensions”. We’ve come across fear and mistrust in bucket loads down here in Cardiff, so who would dare to sell financial services in this market? Well Marlene Shalton would, that’s who. She’s one of the best so we’re going to go and see her. You still want us to go on saving and saving more, and trusting to the markets long- term in a world that’s that risky. MARLENE SHALTON Independent Financial Adviser Unfortunately yes, because unless people take steps to save in one form or another, then they’re not going to be able to retire at all. They’ll probably have to keep working until they drop dead. I mean if that’s what they want to do, that’s fine, but the only people I’ve seen enjoy retirement are those people who’ve taken the time and effort to plan for it and save for it. WHITE: Now I sound like a financial adviser saying this, but they say – and I’m just repeating this – if you don’t take a risk, you're bound to have less growth, it’s just going to mean you're going to have to save harder. MARK: Well yes, but I suppose we’re not really in a predicament where we could take that sort of risk. I mean we’re not millionaires, we’re working class people, and we’re not.. it’s whether we could take that risk or not, and I know we couldn't afford to take that risk. RUTH: I don’t want to take that risk. MARK: No. How Safe is Your Pension? Stakeholder Pension 1 million members WHITE: But New Labour’s big new pensions idea to plug that £27 billion gap we were talking about is precisely to try and get people of modest means who’ve never thought of risking their savings long-term on the financial markets to do so. They’ve invented something called the Stakeholder Pension. Government advertisement Autumn 2001 Department of Social Security Excuse me, I’m looking for some help with my pension options. 0845 7 31 32 33 www.pensionguide.gov.uk WHITE: Launched memorably by some talking dogs, the Stakeholder Pension is meant to attract people earning £10-20 thousand a year. [Pensions Advertisement] You’ve got the wrong kind of web… WHITE: It’s a simple personal pension where the government keeps down the charges that the Pension Industry gets to 1%. You can start one at any age. [Pensions Advertisement] (dog to dog) Roll on retirement eh, my own little kennel in the sun. WHITE: But with stakeholder pensions you still take the market risk, not the government. [Pensions Advertisement] (dog to dog) How are you going to manage that? Getting my pension, got a guide, told me what my options were. Blimey, couldn't lend us one, could you? Sure, I’ll dig it out for you – if I can remember where I buried it. WHITE: Why have you got no confidence? Here you are at the point when you've just been offered one of the government’s stakeholder pensions, so why have you got so little confidence in pensions? RUTH: Because when I put money into some kind of scheme, I want to have it back when I retire, and there is no guarantee that I will have that. And even though it is a good company that I do work for, I don’t have much confidence in the actual pension scheme. MARLENE SHALTON: It is aimed at the lower end of the market, the people who have made little or no provision at all for their pensions, who are on lower incomes, and I think it’s failed miserably in that. WHITE: And she sells financial services. Pensions seem like bad news around here. Got to get on. I’ve got an appointment at a rather smart address in Cardiff, really mustn’t be late. I know, I know, I know. Why are we wasting time in a hairdressers on Friday afternoon when we should be working. Well we are working. We’re here because Ian is an employer as well as a hairdresser and that means that pensions are his business. Because the other thing the government has done with stakeholder pensions is that they’ve roped in employers to help. If you employ five staff or more you have to make sure there’s a stakeholder scheme available and let everyone know about it. Well Ian Davis who runs Ocean has 22 staff. IAN DAVIES Employer I thought a lot of people would have gone for it but I think a lot of them are waiting till tomorrow. They’re not so interested in investing - no matter how little- today, you know.. they just wait, they think they’re too young or whatever, you know. EMPLOYEE: It’s something that I will do eventually. WHITE: Eventually? EMPLOYEE: Eventually. WHITE: But not just at the moment? EMPLOYEE: Not at the moment. WHITE: And what do you feel about that? I mean you're their boss and they’re your concern day in day out. DAVIES: It’s disappointing. WHITE: So you've gone round to find out more about them, have you? EMPLOYEE: I’ve started to, yes. WHTIE: You're on the brink then. EMPLOYEE: (laughing) What is this? Leave me alone. WHITE: So stakeholder pensions have hardly been a raging success in Cardiff. DAVIES: If you turn to some and say well look now you're going to have to start paying £100 a month into a pension scheme, then.. you know.. then they’re going to look at you as if you've got two heads to be honest. WHITE: And if you've got two heads and you work in a hairdresser it couldn't be worse really. DAVIES: It would be very expensive. Our experts will answer your queries after the programme. Text: 07736100 100 or email: www.bbc.co.uk/panorama WHITE: Our pensions night out in Cardiff had started with the pensions doctor, Ros Altmann, you remember, well in with the government, handing out her diagnosis. By now the non-experts were giving back as good as they got. Okay, this is Mark Benson, he’s the son of John Benson, worked with ASW, he works for a sub contractor and lost his job at the same time, and he’s not got quite the same view of pensions at the moment as you do. MARK: Hello, nice to meet you. ALTMANN: Hi, tell me your view of pensions. MARK: Um… not a lot really. I’m not really sure because seeing as it hasn’t made nothing really, I’m thinking well is there any point in carrying the pension on. You know.. because it’s not making.. at the moment it’s not making any money. ALTMANN: That doesn’t mean it wont do in the future. I mean that’s the worst thing I suppose, if it puts you off pensions altogether. MARK: It’s just made me think well would it be better to put it under the mattress if you like or… because then at least I know that I’ve got the money. ALTMANN: Definitely not under the mattress. (laughs) WHITE: So the pensions doctor says save more. Are you impressed if he’s not? RUTH: Um.. I’m not sure. I mean sometimes you have to agree with Mark, you know.. stick it under the mattress. It will be safe there, at least we know it is, but like I said, I mean who do you trust? WHITE: And ASW employees cross questioned Dr Altmann too. EMPLOYEE: But do you think that this government will compensate the ASW workers? ALTMANN: I have no idea. I mean I honestly think there is a moral obligation on governments to make some recompense for this issue. WHITE: Do you think that the government has got a moral obligation to the ASW men and women? Are you going to compensate them? ANDREW SMITH MP Secretary of State for work & Pensions We do have a moral obligation to them and workers across the country to do everything we can. If we were to say in the case of one scheme that for whatever reason it’s gone insolvent that we can bale that out, we would be in the position of standing behind every scheme in the country. JOHN BENSON: Successive governments have done nothing and we’re being penalised. I’m being penalised for paying.. for being loyal. ALTMANN: Yes, that’s how it seems. That’s how it seems. WHITE: And last of all at the pensions night out, Tricia - who’d been teaching Mark Benson to drive a truck – took aim at Dr Altmann. TRICIA: How can you tell me now that alright, put your money into a pension because it’s going to be safe when quite clearly it’s not. I think other people are going to find their own way now to invest money which they feel is going to be safe. ALTMANN: I completely agree with you, that you’d be mad to put your money in if you didn’t think that it was safe. If you thought you were going to lose it all, what would be the point. WHITE: That was what you had spades full tonight, wasn’t it, fear and mistrust. What was it like encountering it personally? ALTMANN: It was worse than I would have expected actually because almost everybody that I spoke to was basically saying they didn’t think pensions were safe, and they didn’t want to put money into pensions and they didn’t think anyone should put money into pensions until the government made them safe. I mean this is almost like a wakeup call really, you know.. we can’t go on like this. How Safe is Your Pension? No Pension Scheme 9.6 million people WHITE: Some people in Cardiff had come to a bleaker conclusion, they weren’t going to have a pension at all. I’d heard of a man who was a close friend of one of the ASW workers, he was in the double glazing business and he was doing a tricky job here in Oriel Gallery. Clive Powell, he’s the one in the middle, is a leading member of the ‘Don’t Bother’ school. He had a pension when he was employed by someone else, but once he set up his own business he stopped it. 43% of the working population, nearly 10 million people, don’t have any sort of pension to look forward to apart from the state one. Why can’t you take the bars off? CLIVE POWELL: They’re cemented in from outside… WHITE: Oh that’s a good reason. POWELL: .. and it’s a major job. WHITE: What are you trusting to instead of your pension? CLIVE POWELL Self Employed I’m trusting my own ability to generate a cash income. WHITE: So the business, right behind us there, that’s your pension. POWELL: That’s correct. WHITE: But how do you know that business is going to keep on paying? How do you know.. if you’re trusting the business to be your pension, how do you know the business is still going to be there? POWELL: Well I don’t, it’s like anything, but then again how do I know a pension scheme is going to be there. WHTIE: What are you doing about pensions? STEVEN DAVIES Absolutely nothing. Absolutely nothing. I have three children, I don’t see why I should pay money into a company.. these big companies that are ripping people off, you know.. you see it in the newspapers, you see it in your local newspapers. People worked half their life and left with nothing. WHITE: What about big respectable financial companies that aren’t ripping people off? DAVIES: Aren’t they? Do you know? Can you tell me for sure that they ain’t ripping them off? WHITE: You don’t trust any of them? DAVIES: No. No, no. WHITE: Nice place, Cardiff, amazing stadium. Yes, they’ve let us in. Look, what we’ve found already is a deep sense of anxiety about pensions down here, and it’s not just the men and women at ASW who feel it. They’ve been quite restrained in the circumstances. It obviously goes far wider than that, and it’s not as if there’s something peculiar in the air down here in Cardiff. No, if they’re that worried about pensions here in Cardiff, it’s a fair bet that there’s a worry about pensions throughout the UK, that there’s a general crisis of confidence in pensions. Monday morning. We’ve dashed back from Cardiff to Central London. There’s a big pensions do on and the star – our friend Dr Altmann. We’re in Westminster at the poshest, newest parliamentary building, Portcullis House, and Ros Altman, the pensions expert, is about to sell her pensions message to the press conference. Now she’s going to have next to her the Economic Advisor to the Prime Minister. Nice to have friends in the top places, especially when the government is about to bring out its own pensions green paper. And we were right, there is a crisis, it’s official. For a couple of months Dr Altmann had been conducting her own national survey about all our attitudes to pensions. ALTMANN: [addressing meeting] Rather than sitting in White Hall and deciding what’s best for everybody, we felt it would be useful to actually find out what they think. WHITE: And she had scientifically discovered, and she was there to tell the pensions great and the good, and the government, pretty much what we’d already learnt in Cardiff. Dr ROS ALTMANN Independent Pensions Adviser to the Government About 60% of people believe there’s a pensions crisis, and even if you don’t go as far as talking about it as a crisis, people believe that policy needs to be changed urgently. So definitely there is an issue that we need to tackle and tackle as soon as possible. WHITE: So we asked Dr Altmann to take her survey a bit further and to examine the crisis of confidence in pensions in more detail. First we asked people who were in a private pension scheme “who do you trust more to keep their word?” 59% said they trusted no one. Personal Pensions Who do you trust more? Pension Company 14% Employer 15% Government 4% 59% No-one ALTMANN: I was amazed. The lack of trust is quite staggering, and I don’t think that policy makers have quite realised how bad it is. WHITE: Then we asked the same question to people who had a company or occupational pension. Just 3% chose the government. Company Pensions Who do you trust more? Employer 35% Government 3% Neither 46% ALTMANN: Almost no one would trust their government most. That’s a very powerful message I think. WHITE: There is a crisis of confidence in pensions, isn’t there, out there, and a staggering lack of trust. ANDREW SMITH MP Secretary of State for Work & Pensions I can understand very well how somebody facing a prospect of losing a substantial proportion of the pension they were counting on, I can imagine not just they feel it’s a crisis, how angry they feel and how important it is that we get the framework right to be able to offer more security in the future. WHITE: But frameworks for the future aren’t quite what the employees from ASW mind about right now. They believe their pensions did guarantee security, only to discover that they didn’t, and their level of trust and confidence in pensions is now around zero. JOHN & LINDA BENSON LINDA: I think it’s a disgrace. In fact I think it’s stealing. I mean.. you know.. the safety blanket that we thought was in position, and I’m sure many others thought was in position, i.e. the pension, was pulled from underneath us and where do we go from here. You know, where do we go from here, because now we’re gong to have to re-think you know.. our whole retirement and I am so annoyed to think that John has worked all these years, along with others, and it’s just gone. WHITE: Linda, annoyed isn’t the half of it, is it? LINDA: Not really, no, it’s not what I would like to say. As far as I am concerned, it’s stealing. And if I’d done it to anybody, I would now be in prison, and I would like to say to Mr Blair, and his Cabinet, where do we and others like us go from here, and what is going to pension funds in the future. WHITE: You don’t deny that there’s a crisis of confidence in pensions and a staggering lack of trust? ANDREW SMITH: As I say, when you consider the ASW workers, or other workers, who face losing a substantial part of the pension they’ve been counting on, of course I understand how they feel. Of course, as Secretary of State, I want to do all that I can within my powers, within the legislative framework, to be able to offer greater security. But when it comes to investments and markets, there is no such thing as total security. WHITE: There were more shocks in store for the ASW employees, adding insult to injury. Their pension fund is now being wound up. That means employing experts and the experts are paid the rate for the job, and the money comes out of the ASW pension fund. Now we happen to have a copy of the accounts from Pinson’s Trustees Ltd, that’s the firm of lawyers who are handling the wind up of the pension fund for the month of October and everything has its price. Even inquiries from the press are billed and charged to the Pension Fund. So for instance it says “Telecon. with PTL press officer concerning enquiries from Daily Telegraph - £97.50.” Then it goes on: “Reviewing and replying to a letter from the Pensions Action Group…” Now that’s the campaign group from the ASW employees themselves, worried about their pension - £130. And the total charges for the month of October are over £8,000. Dr ROS ALTMANN Independent Pensions Adviser To the Government Most windups take years. It’s very rare for it not to take a few years. And in the meantime, money is going out to pay the auditors of the scheme, to pay the independent trustees who are responsible for winding up the scheme, as well as obviously paying the pensions. So the pot of money is shrinking, and by the time they come to actually divvy out what’s left after paying the pensions, there may be nothing left. If your Employer went bust, Would you be…. Protected? 55% Unprotected? 8% WHITE: In our survey we asked people in company pension schemes, do you know what would happen if your employer went bust? More than half thought they were protected. Only 8% knew they weren’t. ALTMANN: It’s amazing, people just don’t realise that they are not protected at all. WHITE: But why should they know? The whole point of final salary schemes was meant to be that the payout was guaranteed. You paid in each month and you knew what you were finally going to get out. After they’d tried to forget about pensions for a bit on the golf course, Sue and Gordon showed us a document with the word ‘guaranteed’ peppered through it. SUE & GORDON MACPHERSON SUE: I’ve got the pension plan that actually relates to 2001 but it still states categorically here that there’s a benefits guarantee fund, and it says that the pension earned in respect of all your services to a certain date is guaranteed to be at least equal to the pension your benefits guarantee fund could buy at retirement. WHITE: So when you got that, not surprisingly I suppose you thought it meant what it said. SUE: Well yes. ALTMANN: There is a part of the pension that is supposed to be guaranteed and there is an illustration in the pension document which tells them an amount of pension that they can expect, and these people are very close to retirement, and that’s the way these pensions are often described because the employer is supposed to guarantee it. WHITE: That’s not a guarantee, that’s a lie. ALTMANN: It’s only a guarantee if your employer stays in business and if your employer keeps the scheme open. Solvent companies are deciding that they can’t afford to run their pension schemes any longer in the same way, so they are just winding up the scheme, and the funding levels that are required by the government for these employers to put in just don’t guarantee that the employees get what they’re promised. WHITE: What does the word ‘guarantee’ mean to you now? SUE: Not a lot. It’s not worth the paper it’s written on basically. WHITE: The sense of betrayal is all the greater because they all knew about Robert Maxwell. In a massive fraud, Maxwell stole hundreds of millions from his own employees pension funds, long before that he told his staff how safe they were. Corporate video 1988 ROBERT MAXWELL: I and my colleagues, together with all who serve in the Maxwell Group of Companies have worked hard to ensure that the Company pension scheme provide good benefits, are financially sound and well run. LINDA BENSON: As far as I’m concerned, when it happened with the Maxwell case the government were supposed to be putting things in place so that it wouldn't happen again. MAXWELL: Should one of these hotshot salesmen reach you, and should you be tempted by his sales patter, then please ask him or her how your personal pension will replace all your existing company benefits and likely improvements in the future. WHITE: After Maxwell a new law was put in place, the 1995 Pensions Act, it does protect pension funds from fraud, but the Act doesn’t protect those who are still working and still paying in their pension contributions when a company goes bust. ALTMANN: Experts in the pensions industry, and pensions lawyers for example, have known all along that the Act protects pensions and not contributions, that’s the way the Act was drafted. Nobody can say they didn’t know about it. Anybody who drew up the Act knows it. WHITE: But John Benson and the rest of the ASW workers had no idea at all that they weren’t protected by the law, and these solid citizens who believed in security have been turned into reluctant political warriors taking their case to senior Labour politicians at the party conference in Blackpool and to ministers in London. They say: “We thought after Maxwell this world was safe” it should be safe. ANDREW SMITH MP Secretary of State for Work & Pensions Well after Maxwell, of course, legislation was put in place and compensation in cases of fraud was greatly strengthened. But that applies in cases of fraud, not in cases of insolvency, and that’s what your interviews will have been bringing out. ALTMANN: I think this poses a huge political threat. If this government doesn’t do something to sort out the protection for people who think that they have a guaranteed pension and who have been encouraged to put money into the scheme by lots of different governments, there will be a problem. WHITE: The green paper is just coming out, Secretary of State. Given the crisis of confidence in pensions out there, you've got a job on your hands, haven’t you. SMITH: It’s a very important job indeed and I take it very seriously. WHITE: It’s a hell of a job though. SMITH: (no response) WHITE: Thank you. SMITH: Thank you. Our experts will answer your queries after the programme . Text 07736 100 100 or email: www.bbc.co.uk/panorama WHITE: The ex-employees of ASW are each finding ways of coping with the financial disaster they’re faced with. John Benson, who’d planned to retire this year on his guaranteed final salary pension from ASW got a temporary Christmas job in the warehouse at Marks and Spencer instead. TRICIA: So Mark, do you think we’ll make a lorry driver out of you? MARK: I hope so. WHITE: John Benson’s son, Mark, passed his HGV test this week, so his career prospects have been boosted, even if his confidence in pensions hasn’t. And Sue Macpherson, who was told years ago that the ASW pension scheme was one of the best in South Wales, is still going off to work there, but she’s working for the receivers now. SUE: It’s very difficult at the moment. Each week different people leave and it’s like part of the family disappearing. It’s very hard. WHITE: This week it was announced that a buyer has been found for ASW. Some of those who were sacked could get their old jobs back but not their old pensions, that’s quite separate. The ASW employees it is presently believed, may get around a fifth of what they thought was their guaranteed pension when the firm went bust. A fortnight ago down at the golf club at Dinas Powis there was a fireworks night birthday party. Dorothy Phillips Amery was 60, state retirement age. She’s secure and provided for. Her husband has already retired and drawing his company pension. This is what retirement is meant to be like, having enough money and being surrounded by friends and family, working in turn towards their secure old age. But for millions in the future, retirement may look nothing like this. Getting old may mean getting poor. That’s the price of the lack of trust in pensions that we discovered in Cardiff in this ordinary community. ALTMANN: That is what’s at risk, you know.. if this next generation says well my parents put money into pensions and they lost the lot, they’re not going to put money in. So we’ve got to be careful, we’ve got to really protect pensions and restore the trust and confidence. WHITE: What does the word pension mean to you now, in a word? JOHN BENSON?: Confusion, Robbery. LINDA BENSON: Uncertainty for the future. ??: Bad news. SUE MACPHERSON: Nothing. WHITE: Nothing? SUE: Nothing. What is the point? Why save? Why be prudent and save all through your life, put money aside for your retirement when this can happen? WHITE: There’s an internet and digital TV forum on the pensions crisis happening now. To take part email us at www.bbc.co.uk/panorama. Next week Panorama lifts the lid on the costs of living in sin. Could you be left with nothing? _________ CREDITS Reporter Vivian White Camera Alex Hansen Sound Recordist Julian Baldwin VT Editor Boyd Nagle Dubbing Mixer Andrew Sears Production Co-ordinator Karen Sadler Production Assistant Emma Shaw Webb Producer Adam Flinter Film Research Kate Redman Research Amanda Vaughan-Barratt Graphic Design Key Yip Lam Julie Tritton Production Manager Helen Cooper Unit Manager Laura Govett Film Editor Peter Sago Assistant Producer Joanna Lee Assistant Producer (BBC Wales) Genevieve Loxton Producer Murdoch Rodgers Deputy Editors Andrew Bell Sam Collyns Editor Mike Robinson 18 _______________________________________________________________________________ _______________________ Transcribed by 1-Stop Express Services, London W2 1JG Tel: 0171 724 7953 E-mail onestopexpress@hotmail.com