Eight months ago the Worcester-based company, Faithful Workwear, which was owned by former Tory cabinet minister Stephen Dorrell MP and made industrial clothing, went into so-called "pre-pack administration." The assets were sold to a new business trading under a new name but without the pension liability of the old business. Now instead of the firm's pensioners living a well earned retirement, after contributing for years to a pension fund, they are set to lose 30 to 40% of their pension and are relying now on the State's Pension Protection Fund (PPF). The PPF was set up, following the scandal whereby Robert Maxwell ripped off all the Mirror Group pensioners & employees, with the aim of ensuring that pensioners are now not left high and dry if their former employers go bust.

But now this lifeboat is being used by dodgy employers to throw overboard company pensioners.

In the case of Faithful Workwear, Mr Dorrell sold off the land for housing and just took the money, instead of putting it into the pension pot as he had promised. He used that sale to buy shares in another business, enough to give him a directorship and an annual salary of £200,000 on top of his MP’s salary. It is OK for him but 300 pensioners are now in limbo, not knowing what their pensions will be in the future.

Pre-pack is so easily arranged that you can in a single day effectively remove a company's assets and leave the pension scheme out on a limb. Pre-pack administrations are being used to dump costly pension fund liabilities. Under pre-pack adminstration the company's assets are sold immediately after it has entered administration and often the previous directors or management then buy the assets from the administrator to set up a new company, asset stripping the profitable sections of the business and using the PPF scheme to look after anyone left high and dry by the shipwrecked company pension scheme..

180,000 people are waiting for their scheme to be accepted into the fund, but the fund is financed by a levy on live company pension schemes. This pool is shrinking as more of these company pensions schemes go belly up,  meaning more public funds will be called on to make up the shortfall and keep the PPF going. The estimate currently is that the fund has a £1.2bn deficit. Fears that the fund might itself become insolvent are being raised, especially as it could be as a soft option in any future public sector cuts.

Rather than allow a system that dumps pensioners into proverty, it is the likes of Stephen Dorrell and his exploiting cronies who should be dumped in the rubbish bin of history.