UK pension law flawed, govt not liable-court adviser

LUXEMBOURG, July 13 (Reuters) Britain has flaws in its protection for workers who lose their pensions when firms go bust, but they are not big enough to make the country liable to make up the shortfalls, an adviser to the EU's top court said.

The advocate general considering a case brought by trade unions said today she believed that breaches existed because Britain did not provide the full protection required.

But it was doubtful the breaches were sufficiently serious to trigger Britain's liability for reimbursement, she said.

The opinions of advocates general are not binding but are followed by the full court in most of its rulings.

Britain's High Court has asked the European Court of Justice for its interpretation of the case.

Britain's biggest private sector trade union Amicus and another union, Community, welcomed the ruling for finding Britain was in breach of an European Union directive on pension protection dating back to the 1980.

The unions have championed the case of former employees of Allied Steel and Wire who lost their jobs and pensions when the British company went into receivership in 2002.

A union spokesman said today's opinion showed the unions were right to insist that the company's pension scheme members should have had all their expected pension benefits protected.

''The fact that this did not happen clearly shows that successive UK governments failed to properly implement the directive,'' the spokesman said in a statement.

On the issue of compensation the unions had evidence they did not give to the European court which they felt would convince Britain's High Court to rule that the government was in fact liable for the shortfalls, the spokesman said.

The unions have argued British reforms, such as the creation of the Pension Protection Fund (PPF) in 2005 to help workers whose companies go bust, are inadequate.

But the British government has said it has done all it is required to under EU law.

''The government notes the advocate general's opinion, including her finding that the facts of the case would not warrant payment of damages. But we await the court's judgement,'' said a spokesman for the Department of Works and Pensions.

Besides creation of the PPF, the government last year set up a powerful regulator to police the corporate pension industry.

REUTERS KD HS2206