Press Release announcing Parliamentary Ombudsman’s verdict
by Dr. Ros Altmann
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PARLIAMENTARY OMBUDSMAN REPORT DEMANDS GOVERNMENT PAY COMPENSATION FOR ‘MIS-SELLING’ COMPANY PENSIONS.
I very much welcome the report in today’s Sunday Times. Their Whitehall sources suggest the Parliamentary Ombudsman – whose report will be published in next month – will find the Government guilty of maladministration of occupational pensions and demand proper compensation for all those whose pensions have been taken away from them, by law, when their company scheme has wound up. I hope this is an indication that Ann Abraham will stand resolute in the face of any Government pressure and demand that this injustice is properly corrected.
This must be the biggest social injustice of the New Labour era and it has been dragging on for years because the Treasury has refused to acknowledge any responsibility. The members of these schemes were encouraged by Government to contribute to their company pension, they were assured that their money was safe and protected by the law and they were never warned of any risk.
This Government actually reduced the security of occupational pensions, but failed to tell members the truth. Indeed official materials, sent to the public, only mentioned the benefits of contributing to final salary pensions and never mentioned the risks. If financial companies encouraged people to put money into something, told them it was completely safe and failed to warn of any risks, they would be forced to compensate for losses suffered.
I hope that, having conducted her detailed and lengthy independent investigation into this affair, the Parliamentary Ombudsman will conclude that Government must pay full compensation to all those affected and I hope she will also recommend additional payments to compensate for damages and stress caused to these people by the delays in acknowledging responsibility for this fiasco. Many of them have spent enormous amounts of money lobbying Ministers to explain their plight, many have had to sell their houses because they could not afford to live in them without the pension they were relying on.
The recent finding of the EU that the Pension Protection Fund may not comply with the 1980 Insolvency directive, if confirmed on further investigation, would add yet more pressure on the Government to acknowledge that it failed to protect members’ pensions.
The Government has tried to pretend that it has sorted out this issue by introducing a ‘Financial Assistance Scheme’ (FAS) but almost 2 years after it was set up, this FAS has not made more than a few ‘interim’ payments and over 80% of the 85,000 people affected are excluded anyway. If the Treasury really wanted to sort this problem out, it does not need to find any money now, but could allow trustees to use the scheme assets (which are generally sitting in a bank waiting to be used to purchase bulk annuities) and pay all the pensions of those who are already over pension age or terminally ill. This could have been done two years ago, I first proposed it in October 2003, but the Treasury has refused to stop the annuities being bought. This is a scandalous waste of people’s money.
I believe that the DWP and Number 10 would like to help these members properly, but the Treasury has refused. I hope, therefore, that the Parliamentary Ombudsman’s report will force MPs to wake up to the fact that the Financial Assistance Scheme will never truly help and that they have been hoodwinked into believing that the issue has been dealt with, when in truth it has not. If this Government really wants to restore people’s trust and confidence in pensions, it must compensate those who did what they were told and took personal responsibility for their retirement in accordance with Government’s direction.