UK needs to do the decent thing over pension obligations

I am astonished that our Government is quibbling over paying in full for pension promises to past employees. Having spent a lifetime fighting for pension rights and listening to government and regulators rightly insisting that employers must not walk away from their past commitments, I cannot believe our sovereign nation might want to wriggle out of paying full pensions on leaving the EU.

UK pension rules force sponsoring employers to secure all pensions, by buying annuities, if they want to relinquish responsibility. Some may consider our pension system is unreasonable in requiring the hugely expensive full annuity cost from employers, especially when they are facing artificially inflated liabilities in the current negative bond yield environment. But that is the law.

In fact, the EU is not demanding that the Government pays the equivalent of annuity costs for these pensions. They are asking far less than employers in the UK would be allowed to walk away with. Yet the Government still does not want to agree.

This is a fundamental question of trust and sends a dangerous message to EU negotiators. One might expect unscrupulous or bankrupt employers to pay less than the full cost of pensions. But honourable employers should not short-change workers, or leave the responsibility to others.

The double standards are unjustifiable. Hundreds of small UK firms and self-employed individuals must meet future pension obligations if they want or need to sell their business or retire.

UK pension laws require them to pay the costs of buying annuities not only for their own workers but also for those of other firms who were part of their multi-employer scheme. There is no leeway to negotiate a reduction. Yet our Government suggests it should not have to pay in full for pensions of past EU employees and wants to haggle over the sums demanded.

It is disappointing to see standards of decent behaviour over-ridden when it comes to Brexit. We will not succeed by trying to bluff, bluster and bully our way to a ‘negotiated’ agreement on our future relationships, without properly honouring our commitments. This is hardly the basis on which ‘deep and special partnerships’ and future friendly relationships are likely to be built.

The last thing we should quibble about is paying properly for pension commitments – in UK law they are supposed to be sacrosanct. We must not be a nation which goes back on our word, so that the EU needs to know it has a reliable partner it can strike new deals with. It is time for moderates to speak up and stop the extremists hijacking all our futures.

Baroness Ros Altmann served as pensions minister under David Cameron