It looks as though the Government is about to be forced to properly compensate the victims of pension scheme wind-ups.

Amendments to the Pensions Bill were tabled yesterday, calling for the hopelessly inadequate Financial Assistance Scheme (FAS) payments to be topped up to the more generous Pension Protection Fund levels.

These payments should be made from scheme assets immediately and, if trustees do not have sufficient assets in the schemes, the Government must make funds available quickly to pay those who are already past their scheme pension age, rather than having to wait for the hopelessly inefficient FAS system to pay out. The administration of the FAS should be passed over to the PPF.

This will not require extra funding from taxpayers. The amendments call for a Pensions Lifeboat fund to be set up, which will initially receive loans from the Government, but those loans will be repaid when the Lifeboat fund collects in assets from unclaimed financial sector funds, including unclaimed pension assets.

The amendments are being tabled by David Cameron, Frank Field, Alan Simpson, Menzies Campbell, George Osborne, Philip Hammond and other MPs who are calling for the Government to change its stance on this issue.

This is a truly bi-partisan initiative which will demonstrate to the Government that the will of Parliament is to ensure justice is achieved for those who listened to official guidance which told them to save in their employers’ pension schemes and that their money would be properly protected by law if their scheme wound up.

So far, the Government has denied any responsibility for the plight of these pension scheme members, even after unequivocal verdicts by the Parliamentary Ombudsman, Public Administration Select Committee, European Court of Justice and High Court Judicial Review.

Now, after the revelations of advice prior to Brown’s decision to remove the dividend tax credits in 1997, it has become clear that he sacrificed these people’s pensions for the sake of cutting taxes for big business. He bears some responsibility for their plight, although he has refused to admit this so far.

The removal of ACT relief was not the most important factor in the demise of final salary schemes, but for schemes which were already in trouble, it was often the straw that broke the camel’s back.

The Chancellor’s advisers made it clear that they had absolutely no information on the effect of the axing of tax relief on smaller schemes. They also made clear that not all schemes were in surplus so that the removal of tax relief would require imminent increases in employer contributions to replace the lost income.

The result was that weak sponsoring employers could not benefit from the cuts in corporation tax (as they were not making profits) and they could not afford the increased pension contributions, so the members were left at the mercy of markets and annuity rates on wind-up.

The Chancellor was offered the chance to wait in order to gather more data, or to phase in the changes rather than removing all at once, but he recklessly carried on regardless.

Ros Altmann, pensions expert and campaigner for the Pensions Action Group comments: “The Chancellor has behaved like Robin Hood in reverse. He took money out of workers’ pension schemes and gave it to profitable companies, saying that everyone benefited! This is nonsense. That is like taking money away from Peter, give that money to Peter’s brother, and saying Peter is not really worse off.”

Brown can no longer escape the consequences of his actions. Tomorrow (Wednesday 18 April), there will be a vote in the Third Reading of the Pensions Bill which will call for the required amendments to be put in place to end this awful chapter of pensions misery and finally give these good people the justice they deserve.

Hopefully enough Labour MPs will vote with their conscience and for their constituents, to force a change of policy on this issue.

A lot of hot air has been generated in the course of the row over exactly “who said what” in the run up to Gordon Brown’s raid on pension funds in 1997.

The now famous removal of the tax credit on dividends was part of a tidying up of the advanced corporation tax (ACT) regime – a process which had been started by a previous Conservative Chancellor of Exchequer, Norman Lamont.

The reform of ACT benefited companies with large overseas earnings, such as BAT, which openly welcomed the change at the time.

The only other comment at the time came from the National Association of Pension Funds which remonstrated to the Treasury in its usual behind-the-scenes way, but otherwise the issue went largely unremarked by the mainstream media.

Fast forward 10 years, and with thousands of final salary pension funds in deficit, Gordon Brown has become the bogeyman of UK plc.

The CBI denies all knowledge of having called for the reform, even though a number of its member companies benefited from the reforms.

So what is the truth of the matter? While the move has certainly caused damage to pension schemes, it is by no means the principal cause of their current plight.

The bear market of 2000-03 which wiped around £250bn off pension scheme assets is principally to blame.

With rising stock markets in the 1990s, pension schemes were lulled into a false sense of security. In 1997, many schemes were in surplus and benefiting from contribution holidays, whereby employer contributions were suspended while buoyant stock market returns kept their pension schemes afloat.

Secondly, changes to accounting rules as to how pension funds are measured and disclosed in company reports turned nominal surpluses into massive deficits over night.

A third factor has been rapidly increasing longevity, which actuaries were aware of, but skated over in the advice given to scheme sponsors about the level of contributions needed to counteract the effect of longer living pensioners, no doubt in a bid to keep employers happy by limiting pension costs.

A fourth factor relates to the law of unintended consequences. Added protection imposed on final salary schemes in the wake of the Maxwell scandal, in the form of inflation-linked increases to deferred pensions and those in payment, have added 50 per cent to scheme costs, according to Lord Turner, the author of the 2005 Pensions Report for the government.

So the £50bn loss to pension schemes over the last 10 years through the axing of the tax credit on dividends is small beer compared to the £250bn hit through the stockmarket collapse, the £50bn cost of inflation proofing and the unquantifiable impact of rising longevity.

That said, Mike Warburton, a senior tax partner at Grant Thornton, who acted as an expert witness for the Times in its appeal against the Treasury’s refusal to release the documents concerning the advice given to Gordon Brown in 1997, is adamant that the measure was nothing less than a cynical tax raising exercise.

“It was a disgraceful attack on pension funds and the linking of the ACT reforms to the axing of tax credits to pension funds was completely unnecessary. The two could have been dealt with separately so that pension funds did not suffer,” says Warburton.