The ASW closure came after steelmaker Corus announced 3, 000 job losses in Wales in 2001.
"The collapse of the ASW scheme is having an awful effect on people's lives, " Dr Altmann said.
The case has been brought by unions representing former employees at Allied Steel and Wire (ASW) and United Engineering Forgings (UEF).
Dr Altmann said it was vital that ASW workers received money, in order to restore widespread confidence in the pensions system.
But former ASW workers are unhappy that they will not benefit from the new legislation and are calling on ministers to make it retrospective.
Meanwhile, pensions expert Dr Ros Altmann, the Governor of the London School of Economics, vowed to fight on to deliver compensation to the ASW staff.
Mr Hain said what had happened to the ASW workers was outrageous, but the Government could not open up the taxpayer to a massive cost.
Peter Hain said that the government recognised that the ASW workers had been treated appallingly and that ministers were looking at the particular problems involved in the cases.
Its own interpretation of rules on aboriginal subsistence whaling (ASW) is that countries are entitled to set their own quotas, provided they are consistent with IWC scientific advice.
However, representatives from the Community union are still involved in a legal case against the government on behalf of the ASW workers, which is due to be heard at the European Court of Justice.
BBC: NEWS | UK | England | Kent | Steelworkers' pension 'injustice'
Pensions Minister Malcolm Wicks has told BBC Wales he did not not want to raise expectations of compensation for the 800 former Allied Steel and Wire (ASW) workers who lost their jobs and pension entitlements when the company collapsed in July 2002.
At the beginning of the month, Welsh Secretary Peter Hain said ministers were trying to find a way of compensating the ASW workers without having to compensate victims of financial scandals in a way that would cost hundreds of millions of pounds.
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