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Last Updated: Thursday, 2 November 2006, 18:01 GMT
No joy for pension scheme victims
James Purnell, minister for pensions reform
DWP minister James Purnell said he had "real sympathy" for victims
The government has again turned down demands that it should compensate some victims of collapsed pension schemes.

It has rejected a call from the Public Administration Select Committee that it should pay out, as requested by the Parliamentary Ombudsman.

In March, the Ombudsman, Ann Abraham, said the government was partly to blame for 85,000 people losing part or all of their pensions between 1997 and 2005.

The Department for Work and Pensions said it still did not accept liability.

Pensions Reform Minister James Purnell said: "We have real sympathy for those who have lost their occupational pensions, and this is why we have put the Financial Assistance Scheme in place.

"However, we do not believe that the taxpayer should be expected to underwrite what were private company pension schemes."


Ros Altmann, a former government pensions adviser and prominent supporter of the pensioners' campaign, said this latest refusal by the government to accept any responsibility was outrageous.

"The parliamentary ombudsman showed clearly why the government cannot escape charges of maladministration but they continue to do so with denials, half-truths and untruths," she said.

Ms Abraham's report in March said the government had been guilty on three counts of maladministration.

She said this had contributed to tens of thousands of pension scheme members losing pension fund money when their employers went bust or their pension schemes were closed with a deficit by a solvent employer.

In particular, the government had published misleading information, she alleged.

She said DWP leaflets had given a false sense of security about the finances of occupational pension schemes.

This view was rejected by ministers at the time. In a fuller response, published in June, the government argued there was no causal link between the alleged maladministration and the individual losses that were suffered.

Then in July, the committee of MPs said that the government was risking a constitutional crisis by continuing to fend off the Ombudsman's demands.

"The pension leaflets neglected to warn of a substantial risk. People have lost significant sums of money," the committee said at the time.

Next year, a judicial review may examine the government's decision not to go along with the Ombudsman's demands.

Speedy wind-ups

In its latest response, the government pointed to an additional 2bn of funds for the Financial Assistance Scheme over the next 60 years.

This is designed to help some of those who lost money in the period before the establishment of the Pension Protection Fund.

The government argued that this would offer some compensation to about 40,000 people, with a further 10,000 gaining some help from being able to rejoin the state second pension.

The DWP has also announced proposals to ensure that in future, insolvent pension schemes are wound up more speedily than before, within two years of going bust.

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