Letter explaining my role in the campaign for compensation
by Dr. Ros Altmann
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Terence O’Halloran’s hard-hitting letter requires a robust response. I fully agree with him that the ‘mis-selling’ of occupational final salary schemes was worse than that of endowments or split-capital trusts. With the latter, investors may have been told that the products were ‘low-risk’, but with employer pensions, the members were told the schemes were ‘no risk’! Pointing a finger of blame at the FSA (which was acting on behalf of the Treasury), was designed to make the very point which Mr. O’Halloran refers to about the use of the word ‘guarantee’ being worse in this case than for other situations. That is precisely why I believe it is essential to compensate those who lost their pensions.
The compensation should be funded by taxpayers, not the financial services industry. Both the Treasury and the DWP told members their schemes were safe, even after they were advised by the Institute of Actuaries to warn members of the risks on pension scheme wind-up. If financial services companies must compensate for failing to provide adequate risk warnings, then the Government must do likewise.
As a society, we have asked and encouraged people to behave responsibly, they have done all that was asked, yet the ‘system’ failed them. How can we turn our backs on those who have lost out when trusting the Government and the pensions industry? If they had been warned, they could have protected themselves, but they were denied the opportunity of doing so. Furthermore, as a society, there is a benefit in restoring confidence in pensions. If those who trusted the system are left high and dry, how can we expect anyone to have confidence in future? The cost of such redress is not even that high. Taxpayers spend £14 billion a year on tax relief for pensions, so an amount of around £75 million to rectify this injustice is tiny in comparison.
Finally, I would like to make it clear that I have never asked for, nor been paid a penny for any of the work I have done for this cause. I have helped MP’s, unions and members willingly, because I believe it is the right thing to do. I believe that someone has to stand up and help and I have worked on an independent, non-party political basis, trying to harness cross-party support for good people who have been dreadfully wronged.
Dr. Ros Altmann