OCCUPATIONAL PENSIONS INVESTIGATION

Letter from the Parliamentary Ombudsman
17th November 2005

Dear Member

I am writing to update you on the progress of my investigation into the security of final salary occupational pension schemes and alleged delays in the winding up of such schemes.

Members of Parliament from all political parties and from all parts of the UK have referred approximately 200 complaints from individual pension scheme members or trustees who claim to have suffered injustice when their scheme wound up with insufficient funds to meet all of its liabilities towards them. I have received more than 400 further direct representations about the same matters.

I wrote to all then Members of Parliament on 16 November 2004 to inform them that I was launching an investigation into those complaints, which alleged that injustice had been caused by maladministration on the part of the Department for Work and Pensions (DWP), Her Majesty’s Treasury, the former Occupational Pensions Regulatory Authority, and the National Insurance Contributions Office of Her Majesty’s Revenue and Customs (NICO).

My investigation has focused on determining three questions:
  (i) first, I have considered whether the official information provided by these public bodies was complete, consistent, and accurate in relation to the degree of security provided to scheme members by the statutory framework for the regulation of occupational pensions;
  (ii) secondly, I have considered whether certain decisions taken by DWP were taken with maladministration. The decisions in question related to changes to the statutory Minimum Funding Requirement for pension scheme funding and to a decision not to disclose the risks to scheme members’ pension rights if a scheme wound up under-funded; and
  (iii) thirdly, I have considered whether maladministration by NICO has caused or contributed to serious delays in the winding-up of certain schemes, leading to extended uncertainty for many individuals and mounting costs which reduce the assets that a scheme has to meet its liabilities.

I have now completed my scrutiny of all of the relevant evidence, covering more than ten years of the development of the statutory, regulatory and administrative frameworks governing the provision of final salary occupational pensions.
I am now drafting my report, setting out my findings on these matters. I have also carefully considered the timetable for the publication of my report.

The factors that have guided this consideration are that:
  (i) whether or not I uphold the complaints, the implications of my findings – for complainants or for government – may be considerable;
  (ii) in recognition both of this and of natural justice, all interested parties – the bodies under investigation, the representatives of complainants and also the professional and other bodies within the pensions industry - should have an appropriate opportunity to read and reflect on my report, before responding to my findings; and
  (iii) the considerable complexity of the matters covered in my report means that it is not reasonable for me to expect responses to my findings within the normal timescales used in my investigations of individual cases.

In light of the above, it is now clear that I will not be able to publish my report by the end of 2005, as I had previously hoped. I do intend, however, to publish it before the Parliamentary recess on 30 March 2006.

I realise that this may disappoint those who keenly await publication of my report, but I hope that you will understand why it is important that the process I use to finalise my report is properly balanced and that the timetable for publication reflects the complexity of the subject matter of my report.

I will write to you again – probably in February 2006 - once the publication date is set.

Yours sincerely

Ann Abraham
Parliamentary and Health Service Ombudsman

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