Press release announcing 7th Feb demo to coincide with JR

by Dr. Ros Altmann

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MPs from all parties will be joining demonstrators this Wednesday, 7th February, on the Green outside Parliament at 12.35pm, straight after Prime Ministers Questions. This demonstration marks the High Court Judicial Review challenge to the Government’s unprecedented rejection of reports from the Parliamentary Ombudsman and the Labour-dominated Public Administration Select Committee (PASC) - which both found that Government actions caused terrible injustice to tens of thousands of people who have lost their final salary pensions when their company schemes wound up.   Many have already died, some have committed suicide, but the Government has refused to admit any wrongdoing.

The political pressure has mounted in recent weeks, and the majority of Members of Parliament have now signed Early Day Motions calling on the Government to organise compensation. 

MPs from all parties are outraged at the Government’s attempts to be judge and jury in its own case and to pretend that it knows better than the Ombudsman what constitutes proper standards of administration.  What is the point of the Ombudsman if Ministers can simply say they don’t agree with verdicts they don’t like? 

MPs asked her to investigate the Government’s role in the disappearance of their constituents’ final salary company pensions - which Government had assured the public were properly protected. The independent 16-month investigation found that Government had misled the public about the reality of the protections it had introduced and that it had denied members any chance to protect themselves and their families.  She found that the Government had failed to adhere to acceptable standards of administration when overseeing final salary scheme safety.

The Judicial Review asks the judge to rule that Ministers cannot simply ‘disagree’ with the findings of their own Ombudsman.   Parliament has appointed her to judge such issues.  It is also asking the judge to decide whether the reasons given by the Government for the rejection of the Report are irrational and unreasonable, and therefore unlawful. 

This issue is no longer about pensions, it is about our constitutional safeguards, which the Labour Government is trying to over-ride with impunity.  If our Parliamentary democracy is to mean anything, then justice must be done here.  Otherwise, citizens in this country will be at risk of being harmed by their leaders in future, and MPs will be powerless to hold the Government to account.  The Government is even trying to bully the claimants into dropping the case, by threatening to bankrupt them if they lose.  Ministers have refused to waive the threat to pursue the Claimants its own legal fees, in the unlikely event that the Judicial Review fails.

This could be a defining moment for New Labour.   An independent verdict says the Government is guilty of betraying tens of thousands of families – innocent victims of broken promises and a betrayal of trust.  The Chancellor has the power to settle this matter, but has so far refused.  Can he recognise when Government must face up to difficult decisions and act with integrity and honour?  Can the country rely on him to recognise and rectify mistakes?  Does he believe in informed choice for those who want to take personal responsibility for themselves and their families?  What does he mean by social justice?  These are questions which the nation needs to know his answers to.

We are expecting MPs from all sides of the house to come out and meet their constituents who will be travelling from all over the country to ask for their support. They will be demanding that Gordon Brown recognises that they have been ‘Stripped of their Pensions’ and that it is his responsibility to compensate them for Government mistakes.

For more information contact:  Dr. Ros Altmann – 07799 404747

ENDS

NOTES for editors:

1.  The Parliamentary Ombudsman’s report, released in March 2006, is an independent verdict on the Government's handling of occupational pensions in the UK.  Government however, rejected both the findings and recommendations.  This has never happened before. This is Parliament's own Ombudsman, set up to monitor the behaviour of Government and her findings should not be ignored because Ministers do not like them.  All MPs must take this report seriously.

2.  The findings are a damning indictment of the manner in which Governments have overseen final salary pension schemes since the 1995 Pensions Act.  The Ombudsman found that members of these schemes were led to believe their retirement income was secure and were encouraged to join or remain in their scheme by untrue Government assurances of protection.  Government policy deliberately wanted to encourage membership of occupational schemes, Government knew that members would not join unless they thought their pensions were secure, so Government decided to tell them they were safe, even though it actually knew that they weren't.

3.  The Report shows how Government said things about pension security that it thought would sound good to the public, but then did something different in practice, without telling people that it was not actually doing what it said.  

4.  When faced with the consequences of its own actions, Government has tried to blame everyone else and fails to accept its own responsibility.  While Government and officials were increasing their own pensions, they were reducing the security of final salary schemes for everyone else, but decided not to tell members the truth.

5.  Ministers have tried to suggest that complying with the recommendations of the Report would be too expensive, but have used inflated figures to frighten and confuse MPs.  The case will explain that the Government has not seriously considered the Ombudsman report and is trying to pretend that the Financial Assistance Scheme (FAS) is an adequate response, when clearly is not.  Less than 1% of those who have lost out have had any money and less than 10% of those already past age 65 are being helped.  The sums for the FAS are also being inflated by using £2.3billion ‘cash costs’ over 50 years.  The Government cannot provide any other example of using cash costs for such long-term spending.  The net present value is only £750m or so and this will also be reduced by tax paid by and benefits not paid to recipients, but again Government has not taken this into account.

6.  It has been several years since the victims of this social injustice first discovered they had lost most or all of the company pension they had contributed to and which Government had led them to believe was safe and protected by law.  The experience of losing one’s entire retirement income and the uncertainty hanging over these individuals and their families is impossible to over-estimate.  These individuals have done nothing wrong.  Their lives have been devastated by the carelessness of Government.

7.  ‘Informed choice’ has been at the heart of the Government’s pension reform agenda, but when it took it upon itself to inform citizens, it did not do so honestly, clearly and transparently.  If those who did indeed take personal responsibility for their future are left high and dry after being lulled into a false sense of security by Government, then the public will be unable to trust any Government on pensions in future.   Government said it was aware that the public needed information from a source it could trust, and that after the Maxwell scandal members were not sure that they could trust their employer or company trustees, and after the pensions mis-selling scandal, they were not sure they could trust financial advisers.    This is what was said at the time, but Ministers are now trying to deny all this and pretend they have done nothing wrong.  This is not the reality. 

8.  For example the Pensions Green Paper December 1998 said:

The Government and the financial regulators have the central role to play in developing the long-term framework and for driving forward the specific initiatives needed to improve pensions information…

We published a new series of DSS pension leaflets in June 1998…The leaflets are concise, accessible and relate information directly to decisions individuals need to take at various life stages…providing clear and unbiased information…  We are running a nationwide marketing campaign to promote the leaflets.’ 

From 1998 onwards, people were told that the official information would explain the pension system to readers and suggest what questions they needed to ask.  Of course, the one most important question (i.e. what would happen to my pension if the scheme wound up?) was never mentioned.  For example, readers were told:

Decisions about pensions can be complicated but this page (and others in the series)

  • Explains the pension system  (no mention of wind-up!)
  • Tells you what your choices are
  • Gives you an idea of the questions you should ask (no mention of wind-up)

The pages will help you work out what is best for you.  The more information you have, the more chance you have of making the right choices to give you the retirement you want…Having a better retirement may mean putting more money into your pension now.  This page, and others in the series, explains how you can do this…


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