Around 200 employees of an organisation that provided advice through the Connexions Service could have their company pensions cut by over 50 per cent, it was alleged last week, writes Amy Taylor. 

Employees of Essex Careers & Business Partnership are facing a cut after the company lost the contract to provide services for EST Connexions partnership. The company was put into voluntary liquidation by its owners Essex, Southend and Thurrock councils.

EST Connexions, the social advice service for young people, has decided to provide its services itself after the government made a £25m cut in the £40m provided for partnerships that use private service providers. The saving should to be used to help fund services outlined in the Children Bill.

The vast majority of the employees have been transferred over to EST Connexions but it has refused to take over the pension scheme.

Chris Martin, managing director at Independent Trustee Services, the company that has been appointed to oversee the pension scheme following the voluntary liquidation, said that the scheme could have a shortfall of around £5.5m and that people could loose over half of their pensions. The voluntary liquidation of the company means it is not liable to make up the majority of the deficit.

“In the light of the government’s proposed amendments to the Pensions Bill aimed at preventing organisations from changing their circumstances to minimise their financial obligations to pension schemes, ITS will seek to recover the full buy out cost from the councils so that members can receive the benefits they were expecting,” he said.

A spokesperson for Essex council said: “We had to balance our responsibilities to the workforce with our responsibilities to the council tax payer.”