Hundreds of thousands of pensioners are missing out on thousands of pounds because part of their pensions is frozen.
Unite says around 400,000 retired workers are seeing the contributions they made before 1997 stuck at the same level, with no increases over time.
Many of these retirees rely on the Pension Protection Fund (PPF) or the Financial Assistance Scheme after their employers went bust, but under current rules, those pre-1997 contributions are not protected against rising prices.
Unite says this has left large chunks of pensions worth only half what they should be. The union is calling on the government to unlock the PPF’s £14.1billion reserves to fix the problem.
After a lifetime of paying in, campaigners argue pensioners should not be left struggling on retirement incomes that have lost so much of their value.
For someone with typical pension savings of £48,000 accumulated before 1997, implementing inflation protection would boost their retirement fund by a minimum of £24,000.
Ministers recognised in May that retirees were experiencing “significant” hardship as inflation eroded their retirement income, particularly affecting those whose workplace pensions transferred to government-backed schemes.
The Work and Pensions Committee had pressed for reforms to address the lack of inflation protection on contributions made before 1997, prompting a formal government response.
Officials confirmed that the Pensions Minister had met directly with affected PPF and FAS members to understand the personal impact of their diminished pension values.
Despite acknowledging these difficulties and promising to examine potential solutions, the government has yet to announce concrete measures to address the problem.
Ministers cited concerns about the financial implications for public accounts, noting that both taxpayer-funded and levy-supported schemes would be affected by any changes to compensation arrangements.
Unite emphasises that roughly 15 retirees whose pensions include pre-1997 contributions die each day without receiving fair compensation for their years of work.
The union argues this creates particular urgency for government intervention, as the number of affected pensioners continues to decline whilst no remedial action materialises.
Unite emphasises that roughly 15 retirees whose pensions include pre-1997
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GETTYCurrent regulations mean workers who paid into their company pensions before 1997 receive benefits worth merely half of what they should be, with no adjustment for decades of price increases.
Sharon Graham, Unite’s general secretary, described the situation as “scandalous”, pointing out that the PPF’s reserves have grown substantially whilst pensioners continue experiencing financial hardship.
She stressed that these workers ended up reliant on PPF or FAS support through circumstances beyond their control when their employers failed, yet now face unfair treatment in retirement.
The PPF’s decision to eliminate employer contributions rather than assist struggling pensioners has drawn sharp criticism from Unite, despite the fund’s massive financial reserves.
The lifeboat scheme opted to reduce its levy to zero whilst maintaining its £14.1billion surplus, a choice the union argues demonstrates misplaced priorities.
Unite contends that using these reserves to provide inflation adjustments would not require any taxpayer funding, making the decision particularly difficult to justify.
The union’s proposal would see the accumulated surplus deployed to restore the real value of pensions earned through decades of work, rather than sitting unused.
Ms Graham argued that delivering “pension fairness” through inflation-proofing would benefit hundreds of thousands of retirees without imposing additional costs on the public purse.