Written question asked by David Laws (Liberal Democrat) on Friday, 17 November 2006, in the House of Commons. It was due for an answer on Tuesday, 21 November 2006. It was answered by James Purnell (Labour) on Tuesday, 19 December 2006 on behalf of the Department for Work and Pensions.

Pensions

Question: To ask the Secretary of State for Work and Pensions whether an estimate has been made of the net cost of compensating those identified in the Ombudsman’s report ““Trusting in the Pensions Promise”” taking into account the resulting reduction in (a) pension credit, (b) council tax benefit and (c) housing benefit payable to those compensated.

Answer: No reliable estimate can be made. We have estimated the cost of replacing in full the lost pensions for those covered by the Ombudsman’s report as £15 billion cash, over 60 years and around £3 billion in NPV. This is, as we have always made clear, the gross cost, taking no account of any possible savings from a reduction in the payment of income-related benefits or any possible increase in tax income. The length of time over which payments would be made make it difficult to estimate what the cost would be after these adjustments, as this would depend on the income distribution of people affected, the tax brackets they are in and their benefit entitlements.

Secondary information