Press Release welcoming launch of Parliamentary Ombudsman investigation - Ros Altmann

    Ros is a leading authority on later life issues, including pensions,
    social care and retirement policy. Numerous major awards have recognised
    her work to demystify finance and make pensions work better for people.
    She was the UK Pensions Minister from 2015 – 16 and is a member
    of the House of Lords where she sits as Baroness Altmann of Tottenham.

  • Ros Altmann

    Ros Altmann

    Press Release welcoming launch of Parliamentary Ombudsman investigation

    Press Release welcoming launch of Parliamentary Ombudsman investigation

    Press Release welcoming launch of Parliamentary Ombudsman investigation

    by Dr. Ros Altmann

    (All material on this page is subject to copyright and must not be reproduced without the author’s permission.)


    Parliamentary Ombudsman is launching a major investigation into pension losses suffered by members of final salary company schemes which are winding up. She has received complaints from MPs, scheme trustees and members, who allege that maladministration by Treasury, DWP, OPRA and NICO (Inland Revenue) has led thousands of members of schemes in wind up to lose most or all their expected pension and caused significant stress and distress to them and their families. It is wonderful news for the victims of this dreadful injustice that they may, at last, receive compensation for their suffering. They trusted the Government, trusted our pension system, but have been left in misery.

    1. Treasury and DWP ignored Actuaries’ advice to warn members that being fully funded on MFR did not offer security on wind-up.

    2. DWP and OPRA were careless with wording of official booklets sent to trustees, which wrongly told them the MFR guaranteed enough money in the scheme to meet liabilities on wind-up.

    3. DWP relaxed MFR twice, without realising the effect on pension security of different classes of member, especially those close to retirement, who could lose their entire pension with no warning.

    4. NICO delays in agreeing GMP entitlements have led to extra costs and lower pensions, as bulk annuity rates have worsened significantly over time.

    The investigation, expected to take several months, could see £5-10bn compensation for the victims of this dreadful injustice. Such help is long overdue, after years of trying to obtain justice for these people.
    The Government has so far refused to accept any responsibility for this problem and offered a totally inadequate amount of £400m over 20 years in a Financial Assistance Scheme, which, if paid as £20m a year could restore pensions to around 100 people out of 65,000! Pension confidence cannot be restored without proper compensation.


    There is a welcome ray of hope today of Government compensation for the 65,000 or more members of company pension schemes, who have lost their pensions. The Parliamentary Ombudsman, Ann Abraham, is launching an investigation into the Government’s handling of final salary occupational pensions in the UK. She will consider charges of maladministration against several Government departments, after receiving complaints from many MPs, on behalf of constituents who have lost much or all of their occupational pensions when their company schemes were wound up. Her investigation will look at the policy decisions taken by Government departments, specifically H.M. Treasury, Department for Work and Pensions (DWP), Occupational Pensions Regulatory Authority (OPRA), and the National Insurance Contributions Office (NICO) , which is part of the Inland Revenue.

    The four specific lines of inquiry will be as follows:

    1. The Treasury and DWP failed to act on warnings from the Institute of Actuaries, in 2000, to tell members that the Minimum Funding Requirement (MFR) standard, set by the Government for occupational schemes, did not fully protect their accrued pensions. Official booklets still reassured members that their pensions were safe, without warning of any risks, until 2003.

    2. The DWP and OPRA did not take enough care when informing trustees of final salary schemes about the protection offered to members by the MFR. Official booklets wrongly told trustees that the MFR fully protected accrued pensions on wind-up, which is incorrect, but trustees did not know this and unwittingly misled members into believing their pensions were secure.

    3. DWP approved relaxation of the MFR in 1998 and 2002, without due regard to the effect this would have on the security of members’ benefits in the event of wind-up. In particular, those close to retirement were unaware they could lose their entire pension and were still reassured by official material that their pensions were safe.

    4. NICO has caused long delays to trustees trying to reconcile entitlements to Guaranteed Minimum Pensions (GMPs) for members of schemes in wind up. This delay has led to substantial losses of pensions for members of winding up schemes, because administrative costs have been incurred and annuity rates have worsened dramatically during the period of delay.

    The Parliamentary Ombudsman has obtained legal advice which clears the way for her investigation to run alongside the case being brought by the Community Union. The union action is challenging the actual legislation passed by Parliament, claiming UK laws did not comply with the 1980 EU Insolvency Directive. The Parliamentary Ombudsman inquiry, however, cannot consider whether the legislation itself was appropriate, but is looking at whether the administration of the laws passed by Parliament was carried out adequately and the way in which policy decisions were taken. In particular, she has been asked by MPs to consider whether Treasury and DWP Ministers ignored relevant evidence when taking policy decisions related to occupational pensions and the extent to which information provided by official bodies to trustees and members of occupational schemes was inaccurate and misleading and therefore misdirected those relying on this information. MPs have asked her to consider whether their constituents’ pension losses are the result of such careless policy decisions, which, had they been implemented properly, could have avoided the injustices that members of UK final salary schemes are suffering.

    The Parliamentary Ombudsman has decided that she has received sufficient evidence of maladministration, which may have caused the injustices complained about, to launch an official investigation, and that the trustees and members cannot reasonably be expected to have alternative remedies in the Courts.

    This investigation is expected to require Government departments to release details of policy decisions and the rationale behind them. The Parliamentary Ombudsman has much wider powers than a Court of law to demand information and can interview Ministers directly. This will be a wide-ranging investigation and it is hoped that a recommendation will be made in a matter of months. If she finds that maladministration has occurred and that this maladministration has led to an injustice, she will recommend to Parliament that this injustice must be remedied and those who have suffered from it should be compensated. It is almost unheard of for Parliament not to follow recommendations made by the Parliamentary Ombudsman. Only 2 cases in the past 37 years have been turned down and none has ever been refused in circumstances such as these.

    There have been many instances where the Parliamentary Ombudsman has forced Governments to compensate the victims of injustice. For example, the Channel Tunnel rail link, Continuing Care for the Elderly and the SERPS (State Earnings Related Pension Scheme) compensation, all of which cost the Government billions of pounds. If the investigation finds in their favour, compensation could run to billions of pounds – it is likely that it could cost £5 – £10billion.

    The victims here are claiming full restoration of the pensions they were promised, and which they were told by the Government were safe and protected by law. They are also asking for her to award them compensation for the stress and distress they are suffering as a result of losing the pension to which they have contributed in good faith, relying on Government assurances. The devastating effect of this situation on the lives of these individuals and on their families is difficult to describe. Their health has suffered, they have been forced in many cases to sell their homes because they cannot afford to live in them and were relying on their pension to provide an income for them to live on.


    1. At least 65,000 members of occupational final salary schemes have lost part or all of their pensions when their employer scheme was wound up. These members often contributed for decades, being encouraged to do so by successive Governments and were always assured by official booklets and information that employer’s final salary pensions were safe and protected by the law. Having believed this, they find that there were, in truth, no real protections at all.

    2. Even after being told that members believed their pensions were protected in a scheme that was fully funded on the MFR, the Treasury and DWP decided to weaken the MFR, failed to warn members that this meant their pension security had been reduced and continued to send out materials which claimed occupational final salary schemes were safe and protected by law.

    3. Trustees of these schemes were also misled into believing that being fully funded on the MFR meant that the scheme could meet all its accrued liabilities on wind-up, by material sent to them by the Government’s official Regulator, OPRA. They then told members that their pensions were safe, but this turned out to be incorrect. Members relied on their trustees and were lulled into a false sense of security, and were therefore denied any chance to protect their retirement income.

    4. The Inland Revenue National Insurance Contributions Office (NICO) has been exceedingly slow in agreeing GMP entitlements for members of winding-up schemes. The GMP (Guaranteed Minimum Pension) is that part of an occupational pension which was paid for by National Insurance contracted out rebates and was supposed to replace the pension that would have accrued in the state earnings related scheme (SERPS and now S2P). The occupational scheme had to receive official approval in order to obtain contracted out status and the approval was supposed to determine that the scheme should be able to pay at least the Guaranteed Minimum Pension amount. In most cases, however, members of winding-up schemes are finding that this promised GMP is neither ‘guaranteed’ nor a ‘minimum’ and members claim their GMP payment has been reduced by delays in agreeing entitlements, which have caused extra administration costs and suffered from significant worsening of bulk annuity rates over time.

    Leave a Reply

    Your email address will not be published. Required fields are marked *