ABOUT 1,400 people whose retirement schemes were plundered by Robert Maxwell face a 50 per cent cut in pensions because the Government has insisted on a £30.5 million payment from one of the funds, it was claimed yesterday.

Law Debenture, trustees for Maxwell Communication Pension Plan (MCPP), one of the four main pension schemes from which the late media baron stole £460 million, said that the fund faces a deficit of more than £40 million.

Part of this shortfall, the trustees say, is because the Department for Work and Pensions (DWP) has taken a “surprising and disappointing” decision to demand £30.5 million in deferred national insurance premiums from one of the healthier Maxwell schemes.

The Government could face serious embarrassment from allegations that it is insensitive to the Maxwell pensioners, whose plight forced wholesale changes to pensions regulations.

Frank Field, the Labour backbencher and former Welfare Reform Minister, and Peter Lilley, Conservative Social Security Secretary at the time of the scandal, joined forces yesterday to demand an inquiry.

In a letter send yesterday to Sir John Bourn, controller of the National Audit Office, they called for an investigation into how the shortfall arose.

Almost 400 pensioners relying on income from the McPP face an immediate 50 per cent cut in payments. A further 1,000 who are yet to retire will also receive pensions of up to 50 per cent less than they were expecting. A further 800 pensioners who received their pension before 1992 will not suffer.

The row stems from a 1992 decision by Mr Lilley to give the Maxwell schemes a temporary exemption from national insurance premiums, in what amounted to a £100 million interest-free loan. He had said the schemes did not have to repay the loan until they were on a sound financial footing.

In 1999 one of the Maxwell schemes, the blue-collar printers’ scheme, became healthy enough to start repaying the Government — a total of £30.5 million to date. But, it is claimed, this same fund, the Maxwell Communication Works Pension, had received excess funds from the 1995 settlement which carved up £276 million in donations made by financial institutions implicated in the Maxwell fraud.

The McPP, according to its trustees, received far less than its fair share because of erratic record keeping in the Maxwell empire. The trustees want the £30.5 million to be redistributed to their members. Eddie Thomas, director of pensions at Law Debenture, said the McPP had assets of £82 million and liabilities of £124 million. “The £30.5 million paid to the Government by the other scheme would go a very long way towards plugging the gap.”

Law Debenture is also furious that the Government took more than three years to reach its decision. The delay meant that the scheme’s winding-up could not be completed. In the interim, the fund has suffered from volatile stock markets, which have increased its deficit by £30 million.

A spokeswoman for the DWP said that the delay was caused by “trying to get the details of what’s gone wrong”. She said the Government was not asking for repayment from the McPP, but treated each scheme on an individual basis. “We don’t think the Government should bail out a scheme that is in deficit because of investment decisions taken by the trustees.”

“I have discretion to postpone collection of these premiums for as long as I am satisfied that it would not be in the interests of scheme members to enforce payments. I have decided to exercise this discretion, on a scheme-by-scheme basis, in the case of the Maxwell pensions. This amounts to an interest-free loan to the trustees of the pension schemes of some £100 million”

— Peter Lilley, then Social Security Secretary, October 1992