Government says 'no' to pension compensation

Government says 'no' to pension compensation

	Published : Wed, 07 Jun 2006 14:00 By : Amy Watts Print this Story

LONDON - The Government has acknowledged that it takes about £100 million less per year to compensate the 125,000 victims who have lost their pensions due to shut down of their companies. However the government will not offer compensation for around 85,000 people affected by wind-ups between 1997 and 2005.

The Parliamentary Ombudsman, Ann Abraham, had issued a report in March saying that the government should compensate these people since it was guilty of maladministration. However the government says that it was not responsible for the losses incurred by these claimants. "It (the government) does not believe that there is a link between that information and the actions taken, nor that scheme members would necessarily have acted differently had the official information been worded in another manner" the Department for Work and Pensions (DWP) explained.

The ombudsman had cited three reasons why the government was guilty. The first reason was that the official information cited by the government regarding the security of the occupational schemes was inaccurate. Secondly the government was lax when it reviewed pension scheme security in 2001 and finally in 2002, the government adjusted the Minimum Funding Requirement (MFR) in a hasty manner.

The DWP said that there was never a government guarantee to any pension schemes. "Information which the government provided in its leaflets was intended only to provide basic information and its limitations were made clear," it added. "The government does not accept the finding that this information was potentially misleading and, thus, maladministrative."

The government's response has not gone down well with the opposition. Liberal Democrat Shadow Work and Pensions Secretary, David Laws said that the response was unacceptable, "There seems little point in having a parliamentary ombudsman if the government slams a report such as this and disregards its recommendations simply because it raises difficult questions."