Pensions Action Group


Response from Dr Ros Altmann to the Ombudsman’s letter
17 November 2005

Some 85,000 people are waiting for the publication of a report by the independent Parliamentary Ombudsman. They were assured that the report would be published in October 2005 and have been nervously anticipating it. However, they have just received a letter (see below) telling them that the Ombudsman has now decided not to publish the report until March 2006.
Having launched their investigation last November, the Parliamentary Ombudsman’s office wrote to complainants in March, telling them that the Report should be complete in July 2005.

On 15th July the complainants received a letter from the Ombudsman's office saying: 'I am sorry that we have not been able to meet our anticipated deadline.' and 'The draft report is now almost finalised. We have received today the last submission from the Government' ... 'That means that our estimate of publication is now shortly after Parliament returns on 10 October 2005' Another letter on 18th July also apologised for the delay in being unable to finalise the report in July - 'I realise that this delay to our anticipated timetable will be disappointing'.

Then, out of the blue, in mid-November, they receive a letter indicating that the report is not even written and will not be published for many more months. This letter hardly acknowledges the dreadful distress that more months of waiting will cause.

This has come as a dreadful blow to people who had been told that the inquiry was finished.

These are people who saved all their lives in company pension schemes, which they were often compelled to join. They were prevented from having any other pension by Inland Revenue rules. They were assured by successive Governments that their pensions were safe and protected by law, but in fact they were not. Having believed and trusted Government assurances of protection, when they found that their life savings had been taken away from them, by law, on scheme wind-up and used for purchase of pensions for other scheme members, they asked Government to compensate them. Government refused and they launched an appeal to ask the Parliamentary Ombudsman to investigate Government administration and oversight of the occupational pension system. They had been pinning their hopes on a proper independent investigation by our Parliamentary watchdog, using our Parliamentary democracy to try to achieve the social justice they deserve.

The reasons given to justify this further delay do not seem to explain it properly at all. It was always the case that this report would be complicated and would entail serious implications for both Government and complainants. That is nothing new and was the case in March and in July and yet back then the Ombudsman's office still indicated that the report would be published around October. How many times can these people be let down?

What has happened? Why has this report suddenly been held up? The Ombudsman's letter also makes no mention of the inquiry investigating the injustice caused to members and whether the Financial Assistance Scheme is causing further injustices, yet the complainants have asked her to look at this too and were told that this has been included. We hope that this is still the case.

Why does Government need so many months to read and respond to a report it was sent weeks ago? The victims are at their wits end. How many times can they be let down and be forced to wait, without apparent concern for the distress this is causing?

I call on MPs to help persuade the Government to compensate these people for the dreadful wrongs they have suffered. This case should never have been brought before the Parliamentary Ombudsman anyway. If such actions had taken place in the private sector, these people would have been compensated long ago. If there had not been a Labour government in power, I believe that these pensions would have been restored by now too.

These people are decent, hard-working citizens, who played by the rules, did what they were told and have been treated appallingly. They did everything society asked and expected of them, they believed and trusted our pension system. It has let them down and destroyed their lives. Some have lost their entire occupational pension and also, because of our system of contracting out, they have also lost their state earnings related pension too. They would have more pension now if they had never, ever put a penny into their company pension scheme at all, because they would have received their pension from the state. Yet, they were told that they were saving for a 'guaranteed minimum pension'! Government told them this and they believed it. Some families have seen the husband, who saved all his life in a company pension, die of cancer aged 56, and he has left no pension and no life insurance either. Life insurance is tied up in their pension scheme too, but they were never told that this could happen, so they did not know they might need separate life cover. Society has let these good people down and we owe it to them to restore the pensions they have lost.

How can we restore confidence in pensions if these people are still left begging and fighting for the pensions that Government told them were safe, protected by law and 'guaranteed'? It is in our national interest to put an end to this suffering now. Justice delayed is justice denied.

1. The injustice of pension scheme wind-ups has affected over 85,000 people. It is not just those whose companies have gone bust. It also affects people whose employers are still solvent and many of whom have lost over 80% of their pensions. The Government tries to say that the problem is caused by employers becoming insolvent with underfunded pension schemes. This is not true. Many employers are still solvent and many schemes were 'fully funded' or even over 100% funded on the Minimum Funding Requirement (MFR) official funding standard. The 1995 Pensions Act and subsequent debates and Government literature, told scheme members that the MFR was designed to ensure that schemes would have enough money to pay members' pensions even if their employer went out of business or the scheme was wound up. However, the MFR was weakened twice, in 1998 and 2002, and was a totally inadequate funding standard. Yet members were lulled into a false sense of security, believing they were safe and therefore that they did not need to worry about pension provision or life insurance, because it was all taken care of in their company scheme. Even when they checked with the Government, they were always told their pension was safe and were never once warned that there was any possible risk to their money.
2. The Financial Assistance Scheme provides no help to anyone. The Government has trumpeted this as the answer to this dreadful injustice, but that is insincere. The Financial Assistance Scheme has committed Government to spend £400m over the next 20 years, but no actual new money is budgeted for the scheme before 2007 and £400m may sound a large sum, but it is totally inadequate to meet the needs of these people. In fact, it is really little different from what they would be entitled to in means tested benefits anyway, so it is rather an academic exercise, which is costing the taxpayer extra money. The whole scheme is only designed to help a small fraction of those affected by this injustice - it excludes over 80% of those who have lost out and even those who are covered will only receive a fraction of the pension they were told was safe and protected by law.

Dr Ros Altmann

Return to Documents page.

©PAG 2003-2019 (CC BY-SA)