UK – The government is to set up a 400 million-pound (593.7 million euros) fund to compensate workers whose occupational pension schemes have been wound up.

The Department of Work and Pensions said pensions minister Andrew Smith would amend the forthcoming Pensions Bill “to help thousands of workers who have already lost out in pension wind-ups so that they are eligible for new help”.

The move follows widespread pressure from MPs and labour unions.

The DWP said the cash would be paid into a fund over 20 years “with the possibility of further contributions from industry”. Details of the fund's operation would be worked out in consultation with stakeholders.

Smith said: "This will give real help to people who have lost their life savings through no fault of their own. I've met many of those affected and am convinced that taking action is the right thing to do - it will also be a huge boost to wider confidence in pensions."

“It is good news that the government has accepted the principle of retrospective compensation,” said Tony Woodley, general secretary of the Transport and General Workers Union.

“What we need to do is to work with the government and those who will operate the Pensions Protection Fund to make sure we deliver in practice for the 60,000 people and their families who are currently affected.”

Opposition Conservative pension spokesman Nigel Waterson said: "We welcome the announcement however delayed the action is. The Government has had to bow to cross party pressure on this issue. They were facing defeat in the House of Commons next week if they had not done something.

Tim Keogh, European Partner at Mercer Human Resource Consulting, said: “The government has bowed to the inevitable and set out to help those who have lost large parts of their pension savings. But although £400 million is a serious sum, it’s not a great amount in relation to the problem.”

The government’s announcement came as the head of the Trades Union Congress, Brendan Barber, told the National Association of Pension Funds that firms which try to cut their pension costs by shutting schemes to staff could be hit by strikes.