Pensions Action Group


Speech by Dr Ros Altmann at PAG Press Conference
14 March, 2006

We are here today to talk about 85,000 broken promises and the 85,000 resultant human tragedies for which the Government must take responsibility.

Tomorrow we will have what could well be the most important report ever published by the Parliamentary Ombudsman.

She will deliver her verdict on the Government’s responsibility for the 85,000 members of company pension schemes which have failed.

Her report is independent and the facts of the case cannot be disputed.

So I believe the report will be a damning condemnation of the Government’s treatment of 85,000 people and their families and its handling of pensions policy. Judge for yourselves when you read her report.

It will show how the Government has broken its promise on their pensions – and left many of them without a penny.  How it misled the public into believing their pensions were safe, when they were not.

85,000 people have been robbed of the pensions they paid into for up to 40 years.
85,000 innocent victims of the Government’s betrayal of their trust.

Each personal case is a tragedy:-

  • a union shop steward, now 63, who read all the official material and told his members their pensions were safe, who can’t afford holidays and lost his 40 years pension contributions
  • a widow left destitute who had to lie to her husband and tell him that they would get their pension, so he could die in peace
  • a 66 year-old robbed of his state pension as well as his company pension
  • a man trying to find gardening work in his later years to make ends meet
  • a 59 year old man who can’t find work and has been on the verge of a nervous breakdown
  • a wife whose husband could have retired and his pension would have been safe, but didn’t know that he would lose his pension by staying on when his company said it needed his skills
  • a man forced to sell his house because he has no money for his retirement, despite saving for 39 years
85,000 personal tragedies.

So what happened and who’s to blame? 
They worked for a variety of companies.  Some of the companies went bust. Some were able to leave pension members without their pensions because the Government’s minimum funding standards were totally inadequate.  Indeed, this Government weakened funding even more, took billions of pounds out by removing dividend tax relief, but continuously told members their pensions were safe.

This situation affects the 400 or so company schemes which started winding-up after 1997 and before the Government introduced the Pension Protection Fund.  It is a finite group of people.  There is a start date and an end date to this fiasco.

So the amount to be paid is not totally open ended.

Since the companies won’t pay, the duty falls on the Government.

Why? Because on several occasions Ministers and officials gave what were clearly misleading statements designed to reassure the public that their money was safe and give them biased information telling of the advantages of company pensions, without mentioning any of the risks.

For example: the Government’s Green Paper of 1998 said:
“People should be encouraged to join their employer’s scheme, but will only do so if they believe their pension rights are properly protected.”

In  April 2000, Malcolm Wicks, then Pensions Minister, said:
“We are aware of the importance of protecting members’ rights. If we cannot do that, they have no-one else to look to.”

Both the Department of Social Security and the Financial Services Authority put out information leaflets stating unambiguously that the pension schemes were safe, protected by law and – I quote – “guaranteed”.

When the pensions department and the regulator both tell people their pension is safe and “guaranteed”, naturally you believe them.  Even these people’s national insurance pensions – which were called ‘Guaranteed Minimum Pensions’ have been taken away – by law.

Unless the Government changes its mind and recognises its obligation, who is going to have the confidence to put their money into a pension ever again?

And what about fairness and social justice.  Where does the Chancellor stand on these issues?  At the moment, this Government denies 85,000 average men and women the pensions – which they paid for in good faith.  At the same time it gives 40% tax relief, amounting to £600,000 per person, to anyone who makes pension contributions up to the maximum £1.5million.

It would cost Gordon Brown, each year, the same as the tax relief on about 200 international tax lawyers to rescue the 85,000 decent men and women who have been robbed of their pensions.

Mr Brown’s response to this report will tell us whose side he’s on. I hope he won’t tell us there’s one law for international tax lawyers and another for Middle Britain.  If you are very wealthy, Gordon Brown will make sure you get plenty of tax relief, but if you do all the right things, play by the rules, believe and trust the Government and then find you’ve lost out, he will tell you that taxpayers can’t afford to help.

I hope he will do the right thing.  On the face of it, this scandal would cost billions to put right.

But simple  proposals which Government has ignored since 2003 could make the costs more manageable:-
First, you don’t need to find many billions, because you should not need to capitalise the long-term cost immediately
Secondly, use the money that is in each scheme to pay out pensions each year.  The money is there to pay pensions and was not intended to buy annuities which take away all the assets immediately

This means that the costs are likely to be around £100 million a year.  If this was done in 2003, the costs to the taxpayer would have been lower, and the longer the Government delays, the higher the costs become.

Nor does the taxpayer actually have to find a penny. This is because there are many billions in unclaimed assets.  Money whose ownership can’t be identified. The Chancellor has proposed giving this money to ‘good  causes’ such as youth projects. A good idea – but only after the 85,000 robbed pensions have been rescued. 

We don’t want to get into the personal blame game. We want to look forward. To find a solution to the disaster that has hit 85,000 decent men and women.

We hope the Government will abide by the Ombudsman’s impartial verdict.  It must listen and learn from her report.

The person who has the power to put it right is the Chancellor. He controls this aspect of Government policy.  We want a clear, simple solution from him – not a complicated play on words.  The Financial Assistance Scheme is a sop to pretend to backbenchers that something is being done, but has merely compounded the injustices and must be replaced.

This is a test of Gordon Brown and whether he has it in him to succeed Tony Blair – is he up to the job?

We will all be watching to see whether he steps in to save the day for 85,000 loyal citizens whose lives are in ruin because they trusted their Government.  Or whether he doesn’t really care.

I hope he rises to the occasion.
Over to you, Mr. Brown.

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