FORMER ASW Sheerness workers who saw their pensions disappear when the steel company went bust have won their battle for compensation.

Minister for Pensions Alan Johnson has announced that anyone within three years of their scheme pension age on May 14, 2004, will receive about 80 per cent of their lost pensions.

The money has come from a rescue fund worth £400 million, called the Financial Assistance Scheme (FAS), set up by the Government after a number of companies went bust leaving their employees without a pension.

Michael Leahy, general secretary for Community which has been fighting the battle on behalf of ASW workers in Sheerness and Cardiff, welcomed the news but said his group still intend to sue the Government.

He said: "Our members formerly employed by ASW have endured over a year of uncertainty and worry about what they may receive from the FAS as they approach retirement.

"Today's announcement resolves this and gives them the opportunity to do some retirement planning.

"However, welcome though this announcement is, there is still a great deal of uncertainty for those more than three years away from retirement, who are the vast majority of our members affected.

"Therefore, at this stage, Community still intends to proceed with the legal action we are bringing against the UK Government on behalf our members at ASW in the European Court of Justice for failure to adequately introduce the European Insolvency Directive, which would have ensured that their pensions were protected."

All is not lost for those more than three years from retirement, though, as the Government has committed to review the scheme after three years, which means more funds could be injected into it to help others affected.

MP for Sittingbourne and Sheppey Derek Wyatt welcomed the news: "All along I have been saying the £400 million is a start. It's also very good news for those that are younger who will get something as well."