Redcar steelworks accountants investigate missing pension payments
|
Version 0 of 1. The accountants who have taken control of the shut-down Redcar steel works are investigating claims that the former owner had not been paying pension contributions owed to its 2,200 workers. PwC, the accounting firm acting for the Insolvency Unit, has been told that in recent months both employer and employee contributions failed to find their way to Scottish Widows, which runs the retirement scheme. Local MPs and trade unions are now demanding a full-scale inquiry into the final months of SSI (UK), the British arm of the Thai-owned steel making group that collapsed into liquidation a week ago. “We want a public investigation into this potential wrongdoing,” said Tom Blenkinsop, Labour MP for Middlesbrough South and East Cleveland. “Obviously it is not proven but we are also looking at claims that insurance and suppliers were not being paid either.” Harish Patel, Unite’s national officer, said the government should intervene to make sure that workers are not left out of pocket. The government has promised £80m of overall aid. “Unite will use all available avenues to ensure their members are not short-changed in what looks like a breach of trust,” he said. The Community trade union said it had been told by its members that pension contributions had not been paid for up to four months. A spokesman said: “It is irresponsible and underhand to take pension money from employees but not pass it on.” SSI could not be contacted and neither PwC nor the Insolvency Unit, a government agency engaged in the Redcar administration, would comment on the allegations. However, well-placed sources said an inquiry into the allegations is underway. The Insolvency Service sought to reassure steel workers that the public purse can provide retirement payments. “The Redundancy Payment Service, a function of the Insolvency Service, can pay both employee pension contributions and employer contributions, within specified legal limits. Claims are lodged by pension trustees, employees do not need to apply themselves. The cost of these payments is met from the National Insurance Fund and becomes a debt in the insolvency.” SSI offered staff a low-cost defined contribution pension when they took over the plant. Contributions from the employer and staff were sent along with the government tax break, worth an additional 20% to standard rate taxpayers, directly to pension provider Scottish Widows. Related: Redcar staff sent letters with advice on claiming redundancy pay Many of the workers will have retirement funds from their time as British Steel and Tata Steel workers, when they paid into a final salary scheme. But the current scheme is linked to the size of contributions and investment gains, not salary and length of service, as under the more generous scheme previously offered. It is understood Scottish Widows was aware soon after contributions stopped in June and approached the steel maker to find out the reason, but was unable to resolve the matter. The Edinburgh-based pensions provider refused to comment, although it is known to be liaising with the regulator following a string of complaints from former SSI workers. Meanwhile, the longer-term future of the Redcar steelworks remains in doubt with PwC in discussions with a number of third parties – including Durham-based coal mining company, Hargreaves, which is interested in the coke-making side of the plant. The blast furnace at the Teeside facility has already been shut down but PwC decided to keep the coke ovens burning at least till the end of this weekend, with last-ditch talks with potential buyers slated again for Monday. The ovens turn coal into the kind of coke best used to heat the blast furnaces. Once the ovens are closed it makes it much costlier for a new buyer to start steel making again. Redcar had been struggling to survive in a difficult market against cheap imports from China combined with a soaring pound and high UK energy prices. Another large steel maker in Britain, Tata, has also made major staff cuts. |