Press Release Calling on Government to Increase Assistance from £20m to £75
by Dr. Ros Altmann
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FSA ‘MIS-SOLD’ PENSIONS AND MISLED PUBLIC – GOVERNMENT SHOULD PAY £75 MILLION A YEAR (NOT £20M) TO COMPENSATE
I welcome the setting up of the Trust Fund to pay pensions to those whose occupational final salary scheme wound up without enough money to pay the promised pensions. This is a bold first step by the Government, but more money is needed to right this dreadful injustice. I call on the Government to set aside £75 million a year for 25 years, which should be sufficient to settle this matter. Members of schemes whose employer was solvent when wind up started must also be included.
All members were misled by successive Governments and all their agencies into believing that their money was completely safe in their employer’s final salary pension scheme. The Government deliberately ignored advice from the actuarial profession to warn people of the risks and continued to claim that final salary pensions were ‘guaranteed’. The Financial Services Authority has shamefully tried to justify its words, but their defence is unacceptable. (An exchange of letters from the Financial Times is attached to this release.) The Parliamentary Ombudsman should be asked to investigate the incorrect, inadequate and misleading information published by Government and should look into how the Government failed to warn members of any risk to their money, yet continued to promote and encourage membership of schemes. If a financial services company behaved in this way, they would be required to compensate in full for any losses and the Government must do the same.
The problem of wind-ups on insolvency is a terrible indictment of our pension system. I care about pensions and am deeply concerned at the damaging effect on confidence which this problem is having. This issue should not be left to rumble on and the cost of restoring the pensions to those so terribly affected is tiny, compared with, for example, the £14 billion of tax relief that is spent on pensions each year or the £2billion each year which the DWP loses in benefit fraud.