Oral question asked in the House of Lords, by Baroness Hollis of Heigham (Labour). It was answered on Thursday, 23 March 2006.

Pensions: Ombudsman’s Report

Question: My Lords, does my noble friend share—as I am sure does the House—everyone’s regret at what has happened to those pension schemes, in the same way as we all deeply regret the collapse of Equitable Life? However, if employers, employees and trustees really believed, on the basis of a couple of leaflets, that the Government were underwriting and guaranteeing the whole of the occupational pension system, what incentive would there have been for any employer ever fully to fund a pension scheme? It is called ““moral hazard””. Does my noble friend therefore agree that the right response is to strengthen and speed up the FAS?

Answer: My Lords, I echo my noble friend’s point that anyone who has met or knows about the circumstances of people who were affected by the problems with pension schemes can have only the utmost sympathy for them. My noble friend was right to refer to the moral hazard. Responsibility in the end lay with those pension schemes and not with the Government. I reiterate: it is difficult to see what causal connection can be made between the very general information in those leaflets and the ombudsman’s recommendation that the Government should pay £15 billion over 60 years. There can be no connection.

Secondary information

Type: Oral question
Reference: 680 c354
Session: 2005-06
Oral question type: Supplementary
Chamber / Committee: House of Lords chamber
Subjects: Department for Work and Pensions Department of Social Security Liability Leaflets Maladministration Workplace pensions Misrepresentation Parliamentary Commissioner for Administration Pension funds Pension rights
Link: View this Oral question on www.publications.parliament.uk