Press Release Calling for Parliamentary Ombudsman to Investigate Treasury and FSA
by Dr. Ros Altmann
(All material on this page is subject to copyright and must not be reproduced without the author’s permission.)
Members of final salary occupational pension schemes, who have lost most or all of their pension when their employer scheme was wound up, are planning to appeal to the Parliamentary Ombudsman, to ask her to help restore the pensions they have lost. They claim they were encouraged to contribute to their company schemes, were told by successive Governments that their pensions and accrued rights were protected by the law and were never warned of any risks. Indeed, the Financial Services Authority (FSA), acting on behalf of the Treasury, assured them their company offered a ‘guaranteed’ pension and the Department for Work and Pensions (DWP) also told them their money was safe. The tone of materials published by the FSA and DWP was that members should stay in their employer’s final salary scheme, to take advantage of ‘guaranteed’ benefits. No mention of the huge risk to their pension if the scheme winds up. However, in 2000, the Treasury was told by the Institute of Actuaries that members mistakenly believed their money was completely safe and the actuaries advised that members should, at the very least, be warned what could happen on winding up the scheme. The Treasury and DWP consulted on this, but decided to ignore the actuaries’ advice. Furthermore, after this, the FSA continued to tell the public that employer’s final salary scheme pensions were ‘guaranteed’ without ever warning of the risks.
How were members to have any idea their pension was not safe? They were denied the chance of transferring their money out of their employer’s scheme, and protecting their pensions. If financial firms behaved in this way, encouraging people to put money in, without any risk warning, the FSA would insist on full compensation for any losses.
The Government has proposed a Trust Fund of £400 million, to assist some of the victims, but it plans to exclude certain groups of people. For example, the exclusion of members whose company was solvent at the time of scheme wind up, has caused severe concerns about the fairness of these proposals and the Parliamentary Ombudsman will be asked to investigate paying full compensation to all those affected by this situation, whether or not their employer was solvent at the time the wind up started.
The Parliamentary Ombudsman can consider any complaint that maladministration by those bodies she can investigate has caused people to suffer an injustice. Some examples include: giving advice which is misleading or inadequate and not offering an adequate remedy where one is due. Ros Altmann says ‘this applies to long-serving members of pension schemes who have been left with little or no pension and are facing a retirement on state benefits, despite having done all the right things to provide for themselves. This surely amounts to Government and its agencies giving misleading advice and the fact that not all members who have suffered losses will be included in the assistance scheme means that the remedy offered is inadequate. The Parliamentary Ombudsman should be asked to investigate this dreadful social injustice’.