MPs demand compensation for pension victims
The government must compensate the thousands of people who lost their retirement nest eggs following the collapse of their occupational pension schemes, an influential group of MPs has demanded.
Up to 125,000 people are thought to have lost significant amounts of their savings between April 1997 and May 2004, after their employers wound up their final salary pension schemes – usually as a result of companies going bust.
The public administration select committee today claims the government encouraged British workers to sign up for occupational pensions without warning of the risks involved in investing in such schemes.
Their report supports previous findings reached by parliamentary ombudsman Ann Abraham, who concluded that the government was guilty of maladministration in publishing “inaccurate, incomplete, unclear and inconsistent” guidance on final salary schemes.
She also recommended that the government should provide financial assistance to those affected, but officials rejected the call for compensation after it was claimed that payouts could total £17 billion.
Today’s report says ministers had been “at best naive and at worst misleading” in dealing with the issue and concluded that by focusing energy on denying the ombudsman’s findings, rather than considering what might be done to help those who lost their savings, the government had “caused further distress to complainants”.
Committee chairman Tony Wright said: “It was entirely reasonable for people to put trust in government information on the safety of their occupational pensions.
“The pension leaflets neglected to warn of a substantial risk. People have lost significant sums of money.”
“The government should stop quibbling over this and act to find an acceptable solution for the thousands affected,” he added.
A spokesman for the Department of Work and Pensions (DWP) said it would consider the committee’s conclusions “carefully”, but stressed that officials did not agree that the government was guilty of maladministration over the advice it published.
“We do not agree that the government acted with maladministration or that there is a link between the general, introductory advice we published and the loss of people’s pensions,” the spokesman said.
