Lords vote to help the penniless pensioners

Labour's refusal to bail out victims of collapsed pension schemes was overturned in the House of Lords.

Peers voted to provide a lifeboat fund to help 125,000 pensioners who have been left penniless in their old age.

The amendment to Labour's Pensions Bill was backed by a coalition of Conservative, Liberal Democrat and cross-bench peers.

MPs will vote on the measure in the House of Commons after Gordon Brown takes over as Prime Minister on June 27 - making it one of his first tests as leader.

It could also prove to be a humiliating defeat.

A similar opposition amendment in April was defeated by a slim Government majority of 22 votes.

But Tory pensions spokesman Philip Hammond said he hoped more Labour MPs would 'look to their consciences' to help their constituents in the next vote.

"This will be the first major test of Gordon Brown's premiership," he added.

"Does the man who is raiding £5billion a year from pension funds have the decency to back this proposal to help those whose pensions he has decimated?"

The lifeboat fund would use assets from defunct schemes and unclaimed money from forgotten savings accounts to compensate victims of collapsed pension funds.

Labour says it already helps victims through the Financial Assistance Scheme.

But critics point out that this has only helped 9,000 of the 125,000 who lost out.

It has cost nearly £10million to run but has paid out just £3million - or £28.80 for every pensioner.