Governments £2.6 Billion Pension Rescue

The Government has announced that workers who lost their pensions when their employers went out of business between January 1997 and April 2005 will receive 90% of their value.

Work and pensions secretary Peter Hain has unveiled a £2.9bn rescue scheme for almost 140,000 people eligible for the Financial Assistance Scheme (FAS) and will bring those workers in line with people whose firms have gone bust since April 2005, all of whom are covered by the Pension Protection Fund.

Hain said: "I'm delighted that we are able to announce a settlement that will provide justice for the 140,000 people affected when their schemes were wound up, including members of schemes where the company is still solvent.

"This builds on the substantial steps we've already taken to put right the unfairness they experienced."

Community union general secretary Michael Leahy said workers were "ecstatic" that they would be receiving 90% of their expected pensions, adding: "This has been a story of successive political failure by Conservative and Labour Governments which has caused unnecessary suffering and anguish for those affected and has undermined public confidence in the UK pension system. We are delighted that the Government has finally listened and acted to end this running sore."

Shadow work and pensions Secretary Chris Grayling said: "Congratulations to all of the campaigners who have spent their own time and money trying to get this Government to right its pension’s wrongs."

Liberal Democrat work and pensions spokesman Danny Alexander said: "This is no less than these people deserve. Given the Government's record, we will have to watch the small print but finally it seems as if ministers have been dragged kicking and screaming into doing the right thing."