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Occupational Pensions

In her report published today, the Parliamentary Ombudsman has found that some of the information issued by the Department for Work and Pensions and the then Department of Social Security on the security of occupational pensions amounts to maladministration. She has made a similar finding with regard to a decision made in 2002 on the calculation of the Minimum Funding Requirement for salary related occupational pension schemes. The Government do not accept these findings. The Government recognise the hardship and distress faced by those people who have lost all or part of their pension when their pension schemes have, or are being, wound up. That is why we have set up the Financial Assistance Scheme, with £400 million of public money. But, having carefully considered the Ombudsman's report, the Government do not believe that it makes a sustainable case that maladministration occurred or that these losses were the responsibility of Government. In the Government's view the responsibility for the schemes rested with the companies whose schemes have, or are being, wound up and with the trustees who, with the benefit of professional advice, were responsible for protecting members' interests. In respect of the Ombudsman's specific findings the Government do not consider that any of the named leaflets or quoted statements could have formed a proper basis for scheme members, still less trustees who were professionally advised, to assess the security of their individual pension schemes. The leaflets were general and introductory in nature. They were not a full statement of the law. They made both those points clear. In addition, the Government believe that the report fails to demonstrate that decisions taken by individual scheme members were influenced by the information which the Government did, or did not, make available. As far as the 2002 decision on the Minimum Funding Requirement is concerned, the Government believe that we acted wholly responsibly in implementing the recommendation of the actuarial profession which had received the backing of the Government Actuary's Department. Against this background, the Government have considered carefully the Ombudsman's first four recommendations—which involve considering whether to restore the lost pension rights of affected scheme members, making consolatory payments and apologising to scheme trustees. As the Government are unable to accept the findings on which those recommendations are based and do not consider that it would be in the wider public interest for tax payers to fund all lost pension benefits we do not believe that it would be appropriate to take the action suggested. The Government do, however, accept the Ombudsman's fifth recommendation with regard to reviewing the time it takes to wind up a defined benefit pension scheme. Work is already underway in this area.