Greg Wright: Members in limbo as Carrington pension saga drags on

Hundreds of workers at Carrington Wire joined their company pension scheme because they believed it would offer them a comfortable income in retirement.

They took the Government’s advice and made careful plans for their old age. Now, their dreams of a happy retirement hang in the balance, and some members are already suffering financial pressure. What the 500 members of the scheme want is, in essence, very simple. They want the Pensions Regulator to safeguard their pensions. Three years after the Pensions Regulator launched its investigation, they are still waiting for decisive action. Carrington Wire. based in Elland, West Yorkshire, closed with the loss of more than 80 jobs in 2010. The Russian parent company Severstal said the decision was due to a contraction in the steel wire market. In 2010, Craig Whittaker, the Conservative MP for Calder Valley wrote to the Pensions Regulator, calling for an investigation into the position of the company’s pension scheme after what remained of Carrington Wire was sold out of the Severstal group.

Last year, Barnsley Central Labour MP Dan Jarvis and Mr Whittaker met Pensions Minister Steve Webb and Pensions Regulator Stephen Soper because they were concerned about the time it was taking to complete the investigation into the pension scheme at the former manufacturer.

The uncertainty caused by the Pensions Regulators’ failure to complete its investigation is causing distress to Yorkshire people who fear they could lose tens of thousands of pounds.

Last week, a spokesman for the members of the pension scheme said that, since the beginning of the month, the “more generous” payments under the Carrington Wire scheme have been reduced to the Pension Protection Fund (PPF) level.

The spokesman added: “This is causing serious hardship to people who took early retirement and have not yet reached state pensionable age. It is also causing serious hardship to those members who were already receiving a pension greater than the PPF cap, and who now have to unexpectedly survive on a lower figure.

“We assumed that, if the Carrington Wire pension fund was not in the PPF, it would continue to pay at the same level. I can now give an example of the recent death of one of our long-standing members, whose surviving spouse should be in receipt of her full pension guaranteed for five years, but is only receiving 50 per cent of the lower level – that means 50 per cent of the 90 per cent PPF payout of the deceased’s pension.”

Mr Jarvis told me: “It’s unacceptable that some members of the Carrington Wire pension scheme are now facing hardship, in part because of the length of time this, admittedly complex case is taking to resolve. These are ordinary hard-working people, who deserve clarity about their financial futures, so they can plan for their retirement.

“I will be again making urgent representations to the Minister for Pensions and the Pension Regulator to seek to resolve this situation as quickly as possible.”

According to Mr Jarvis, the Carrington Wire case has wider implications, which the Government should heed. Addressing a question to Mr Webb in the Commons last year, Mr Jarvis said: “He is aware of my concern over foreign companies which have purchased and asset-stripped businesses in the UK.

“In some cases, these firms have discarded their pension responsibilities in such a way they have endangered the pensions that employees are entitled to. Can I ask the Minister to explain how he is working with The Pensions Regulator and colleagues in Government to curtail this predatory behaviour?”

In reply, Mr Webb said that in the previous year, the regulator had engaged with more than 1,100 schemes linked to overseas employers. Between April 2010 and August 2012, the regulator exercised its powers at least 10 times in relation to schemes with overseas employers. A spokesman for the Pensions Regulator confirmed that the Carrington Wire scheme entered the PPF assessment period in February 2013, which means pension payments are subject to restrictions required by legislation. The spokesman added: “A complex investigation will often take a significant amount of time but we remain in regular contact with the trustees.”

Severstal has declined to comment on the Carrington Wire saga.

Nobody doubts that this is a complex matter. But isn’t this precisely the type of case that the Pensions Regulator was established to resolve; as quickly as possible?

It would be tragic if time robbed the pension scheme members of any chance of obtaining justice.