The UK government has issued draft regulations to ensure a fairer sharing of assets when a final salary pension scheme is wound up.

The principal change is that benefits for active members of a pension schemes will be calculated on a sliding scale that reflects the length of time a member has been contributing top the scheme.

Currently, active members of final salary schemes are ranked equally, regardless of the length of time in the pension scheme.

This means that older people who have been in the scheme for many years are treated the same as those with only a few years membership.

Malcolm Wicks, the Minister for Pensions, said: "We think this is unfair. We want to take action to ensure that when a scheme is wound up , the remaining assets are shared as fairly as possible between pensioners and non-pensioner active scheme members.”

Pensioners will still come first under the proposed regulations. The government says this is justified since pensioners are the least likely to be able to generate an alternative source of income. However, the rights of active members of a pension plan will be given priority over the future year-on-year inflation increases to pensions that are already being paid out.

The draft regulations will sent out for consultation until the beginning of December. The Department for Work and Pensions says it intends to lay the regulations before parliament by early 2004 so that they come into force as soon as practicable.

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