Millions would suffer in pensions overhaul

MILLIONS of savers could lose nearly a third of their pension pots if new government measures are given the go-ahead, a report has warned.

Cash-strapped employers could be allowed to reduce final salary pensions without first going through courts under plans being considered by the cross-party Work and Pensions Committee.

More than 11 million workers could be affected, according to pensions specialist Hymans Robertson.

Under “conditional indexation” firms could reduce annual pension uplifts to as little as zero, shrinking savers’ total retirement income by up to 30 per cent over an average 25-year retirement.

A committee spokeswoman said the move was “just one of the options under scrutiny”.

She added: “Conditional indexation is a protective measure and would only affect people in failing pensions funds such as BHS or Tata Steel. It means lots of people would get at least some money, if only part of what they were expecting.”

It comes as the hole in the funding of final salary schemes breaches £1trillion. Former pensions minister Baroness Altmann said: “It would be a shame if these fears undermined these pensions as they are the best type of pension available for most workers.”

Retirement consultant Malcolm McLean warned the measure could become a “free for all” unless there are special conditions to prevent employers abusing the rules.