WORKERS at troubled Sheerness steel mill are incensed that their final salary pension scheme with Allied Steel & Wire has been wound up.

It could mean that those due to retire in the next 10 years will only receive a fraction of what they were expecting. Those who are already in retirement will continue to receive their pension.

Receivers KPMG announced the decision in a notice to employees. It said the action had been taken to protect the interests of members. Peter Holsten, Iron and Steel Trades Confederation local branch secretary, said the pensions wind-up could affect 20 per cent of the mill's 300-strong workforce.

He added: "The employees can no longer pay in to their pension scheme. As far as we know, the Sheerness pension scheme was healthy, so we don't understand why they had to wind it up.

"Employees will now have to decide whether it is best to keep the money in the pension fund or withdraw it and invest it elsewhere. If they take the money out, they will be penalised.

"People have worked out their retirement around their pensions - now they're going to have to re-think their finances and plans.

"Some employees have been hit with a double whammy because they were also paying Additional Voluntary Contributions (AVC) where the money is invested into other companies.

"The money was invested in Equitable Life, which has also collapsed. Once again, the payouts to those people involved in that scheme will be greatly reduced."

Pinsents Trustees Ltd, an independent trustee appointed by KPMG to manage the pension fund, wound up both the Sheerness and Cardiff schemes.

There is no obligation for a new buyer to continue with the pension scheme.

Joint administrative receiver, Roger Oldfield, said: "We will keep the situation under review."