Professional Pensions article on Judicial Review verdict

by Dr. Ros Altmann

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Yet another defeat for the Government over its refusal to compensate the victims of pension scheme wind-ups.  Many have been struggling without their pensions – and even without some of their state pension - for years.  They were misled, by Government guides, which failed to mention the risks of pension losses on wind-up and said their pensions were safe after 1997.

The High Court judge ruled emphatically against the Government.  Mr. Justice Bean confirmed that the UK Government is guilty of maladministration, causing injustice by misleading the public about the security of their final salary pensions.  This endorses verdicts from the Parliamentary Ombudsman, Public Administration Select Committee and European Court of Justice.  I hope this latest damning condemnation of the Government’s position will finally make Ministers see that they have to accept responsibility for what has happened. 

It is encouraging that the judiciary recognised the urgency of this case, even if the Government itself is not doing so. The Judicial Review verdict was delivered remarkably quickly

While the DWP has claimed, since 2004, that it sympathises with those affected and has set up the  Financial Assistance Scheme (FAS) to help them, most of the people affected are not receiving any money.  The FAS is political spin at its worst.  It is now 2007 and, of over 10,000  people already past their pension age, only a few hundred have had a penny from the FAS. 

Yet, in Parliament last week, the Government was still insisting that it had put ‘£2.3bn’ into this scheme.  This is more disgraceful spin.  The deliberately exaggerated ‘cash costs’ amount to just over £750million net present value over 50 or 60 years and the net cost to the taxpayer will be even less than this, because payments are taxed and recipients will not get means tested benefits. In fact, administration of the FAS has cost the taxpayer over £7million while only about £3million has been paid to victims.  The Treasury itself has not put in any money at all.  Hardly any wonder, then, that people are not being paid and that every independent verdict has concluded that the Government must rethink the FAS.  

This is not just about pensions, it is about our democracy.  No Ministers should be able to just 'disagree' with the Parliamentary Ombudsman.  The financial services industry has to accept its Ombudsman’s verdicts, the Government must do the same.  This Government has tried to over-ride due process.  Even worse it is still trying to pretend that it cares, while prolonging the suffering of the victims. 

The FAS is not compensation or pension restoration and strikes no kind of balance between the interests of scheme members and anyone else.  It is a waste of taxpayers’ money and should be scrapped.  Emergency talks must be held to arrange a rescue scheme, while permitting trustees to pay out benefits to all those already past their scheme pension age immediately from scheme assets.  A trust fund worth around £3billion is needed, or a commitment of around £100million a year for 60 years.  Government must organize this.

Mr. Hutton’s heartless Parliamentary response to the verdict was that he needs more time to ‘study the Court’s ruling on this matter very carefully’.  Rubbish.  It is perfectly clear that no independent body agrees with his stance.  As the High Court has ruled - it is untenable, irrational and one which ‘no reasonable minister’ could maintain.  A commitment to remedy the consequences of the maladministration must be made immediately.  These good people have suffered long enough – well beyond all decency. If we ever want to restore some confidence in pensions, this dreadful injustice must urgently remedied.


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