HUNDREDS of people in Hampshire were today in shock after being told that the value of their company pension has been wiped out by up to 80 per cent.

Staff at electronics company APW were left in tears when management informed them their pensions were to be slashed.

Some, who had been saving for 20 years, are now facing retirement on a fraction of what they expected.

The American-owned firm say they have been forced to make the move in a bid to save their company from folding.

APW Electronics delivered the news by letter to everyone at its manufacturing base at Electron Way, Chandler's Ford.

The letter outlining the problems was signed by directors Samantha Kirby and Michael Gasick.

It is understood that a number of staff were too upset to carry on working following the revelation, which they said came like a bolt out of the blue, and left for home in tears.

For example, it means someone looking forward to drawing £20,000 a year in retirement will now only get £4,000.

The bombshell announcement affects more than 1,000 employees and pensioners, past and present.

Some of them also face working past retirement age in order to achieve financial security.

One employee had only just transferred £40,000 in pension value from a previous company. It is now worth the equivalent of £8,000.

Union chiefs today described the 230 permanent employees at the electronics company near Southampton as "flabbergasted" and in "deep shock".

Eastleigh MP David Chidgey called the situation "appalling" and is set to raise his concerns with management and the UK pensions watchdog.

APW blamed a £55m black hole in the pension fund, along with difficult trading conditions, which in the past have seen hundreds of jobs shed.

American-owned APW said the company would founder unless it wound up the final salary scheme, which it could not afford to run any longer.

A wind-up application has been approved by London's High Court following action

by the scheme's guardians, known as trustees.

APW, which also has a small base at Uxbridge, near London, confirmed all 1,000 or so members of the pension scheme will be affected by what it describes as a "compromise" option.

Anyone who is currently drawing a pension will not be affected as the payments are ring-fenced, say trustees.

But their pension benefits won't be linked to inflation rises, so their pension will be worth less when the cost of living goes up because of inflation.

Company spokesman Graham Isdale said: "We accept that people are upset and we are deeply sympathetic with all those who have been affected."

He added: "Action had to be taken to safeguard the future viability of the company.

"We are hoping to develop - and safeguarding jobs is of paramount importance."

Company directors Ms Kirby and Mr Gasick told staff the company now has "a more viable business in the UK" following "difficult decisions and changes".

The trustees confirmed to members in a separate letter that money in the current pension scheme will only meet about 20 to 30 per cent of each full pension.

They also said the compromise solution was "in the best interest of members".

If the company became insolvent and pension contributions went down the plughole, workers would not receive any state aid, trustees argued.

Terry Edwards, the regional

officer for skilled workers' union Amicus, which represents 150 members at APW, today spoke of the widespread shock felt by staff.

He accused the company, where assembly workers earn up to £26,000, of not letting them know at an earlier stage that things were so bad.

Mr Edwards said: "Some people who are nearing retirement, or have transferred considerable amounts of money from pension schemes with other companies, were flabbergasted by it all.

"Quite a few of them went home because they were so shocked. They could not take it in.

"People rely on the pension for their security through retirement.

"They will now have to re-think their lives again."

Mr Edwards said staff recognised APW had to take steps to stop going under, but he expressed "deep concern" about what had just taken place.

He added: "They implemented this decision without any discussions with us."

Amicus is seeking legal advice from its own lawyers and pension experts in a bid to safeguard the most vulnerable members, as well as seeking compensation.

Talks between Amicus and APW are also on the cards.

APW, which makes electronic enclosures for computers, said it is bringing in personal stakeholder pensions, with the company making enhanced contributions to those people worst affected.

However, the inability of APW to meet all of its pension obligations throws into doubt what protection thousands of workers in Hampshire have when it comes to a final pension scheme.

As previously reported by the Daily Echo, a growing number of companies in and around Southampton have collapsed under the burden of a final salary scheme, which can do badly if stock market investments fail to deliver.

The onus is on companies to top the fund up if it's doing badly, and the money is normally drawn from operating cash flow, which can be tight.

Last year alone more than a quarter of companies in the UK closed their schemes because of falling returns and great administrative demands.

It was unclear today whether APW staff would get any compensation from the government's planned Financial Assistance Scheme, which will compensate workers who have lost their pensions after their companies went under.

However, the Department of Work and Pensions, which was aware of the APW case, said "final entry" rules to the FAS had yet to be finalised.

That means workers at solvent companies like APW might be in line for help.

A DWP spokesman said: "Whether schemes where the sponsoring employer is not insolvent will be eligible for assistance has still to be decided.

"Solvent employers should support their schemes and provide the benefits that members were expecting.

"Nevertheless, issues of employer solvency remain under consideration."

APW is owned by APW Ltd, an American company that floated in New York in July 2000. Nearly two years later it was granted bankruptcy protection before emerging as a private company in a complicated debt-for-equity deal.

The Daily Echo understands that professional advisers suggested that APW's trustees, who act as guardians of the pension scheme, go with the compromise.

Under rules set down by the Occupational Pensions Regulatory Authority, the pensions regulator, trustees must seek legal guidance before entering into a compromise agreement.

The company must also prove that its financial difficulties are serious enough to warrant the deal.

Are you one of those affected by APW's pension bombshell? Contact the Daily Echo on 023 424491 or e-mail the newsdesk at newsdesk@soton-echo.co.uk or write to the Daily Echo, Newspaper House, Test Lane, Redbridge, Southampton SO16 9JX