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Last Updated: Wednesday, 21 February 2007, 12:28 GMT
High Court victory for pensioners
A pension protest
Protests have been growing over lost pensions
Four people who lost all or part of their company pensions have won their High Court case against the government.

The court ruled that the government was wrong to completely reject the Parliamentary Ombudsman's report into collapsed pension schemes.

The Ombudsman, Ann Abraham, said last year that the government was guilty of maladministration.

The court decision does not oblige the government to compensate an estimated 85,000 people for their loss.

Solution sought

At Prime Minister's Question Time in the Commons following the ruling, Conservative leader David Cameron called on the government to sit down with opposition parties and groups representing members of bust pension schemes to work out a compensation package.

It's a big step forward. But we will have to wait and see what the government reaction is
Henry Bradley, plaintiff

Prime Minister Tony Blair responded that the government had set up a 1.8bn Financial Assistance Scheme and although he "sympathised" with those affected, any solution had to be "affordable".

Work and Pensions Secretary John Hutton told the BBC that the government would have to give "very careful consideration" to the ombudsman's report.

In a separate statement, David Laws, Liberal Democrat Work and Pensions spokesman, said that unless the government settled with the pensioners he would table an amendment to the Pensions Bill calling for compensation.

'Big step'

The court case was brought by four people who had lost their pensions - Bob Duncan from Jarrow, Andrew Parr from Kent, Henry Bradley from Belfast and Tom Waugh from Staffordshire.

"It's a big step forward. But we will have to wait and see what the government reaction is," Henry Bradley said.

Fellow plaintiff Bob Duncan said that he was "over the moon" about the ruling but feared the government will appeal.

Think again

The case affects 85,000 people who lost their pensions when the firms they worked for went bust between 1997 and 2005.

Many of these people face an impoverished old age.

85,000 people were affected
400 schemes closed with deficits
They were shut between 1997 and 2005
Only limited compensation is available from the Financial Assistance Scheme
The Pension Protection Fund only covers schemes from April 2005

Mr Justice Bean ruled that Pensions Minister John Hutton had no right to reject the Parliamentary Ombudsman's report in its entirety.

The ruling means that the government will now have to think again about whether to compensate the people who have lost their pensions from public funds.

Ombudsman's report

The judicial review was an attempt to compel the government to abide by the Ombudsman's rulings.

Ann Abraham published her report in March 2006.

She said that the government's maladministration had "caused injustice to a large number of people who, as a result, lost the opportunity to make informed choices about their future".

But the government has repeatedly argued that it was not at fault and it would be too expensive to pay full compensation.

The government has estimated the total cost of paying compensation at 15bn, but campaigners for people who have lost their pensions say the true cost would be much lower.

A pensions campaigner reacts to the verdict

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