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Last Updated: Wednesday, 21 February 2007, 17:49 GMT
Pension victory: What did the judge say?
By Ian Pollock
Personal finance reporter, BBC News

Protesting BUSM pensioners
Some of the pensioners protesting in London last year
"A wonderful victory".

That was how Ros Altmann, the spokeswoman for the Pensions Action Group, described the decision of the High Court.

Mr Justice Bean has ordered the government to consider again the first recommendation of the Parliamentary Ombudsman, Ann Abraham.

Last year, she decided that the government's maladministration had led to injustice for tens of thousands of people who had lost all or part of their money when their pension schemes were wound up.

As a result, she said the government should arrange much more compensation for them than is currently provided by the Financial Assistance Scheme.

However, this was the only one of the four claims put forward in the judicial review that the judge upheld.


The claim that the judge supported was critical - that injustice had been caused by government maladministration.

A member of the general public between 1995 and 2005 could not [have known] that if his employers went out of business just before he reached retirement age, he might get no occupational pension at all
Judge Bean

Specifically, he agreed that government publications, such as leaflets and pamphlets about the potential security of occupational pension schemes, published in the wake of the 1995 Pensions Act, had been misleading.

They had assured any members of the public who cared to read them that the new law, designed in the wake of the Maxwell scandal, would make sure that the pensions of all occupational pension scheme members would be secure, even if the scheme was wound up.

As everyone now knows, this turned out not to be the case at all.

The government barrister in the High Court tried to wriggle out of the plain meaning of one leaflet.

But the judge dismissed this approach, saying: "Such minute textual analysis of a pamphlet aimed at the general public can, in my view, only give comfort to those who consider that it is unwise to believe anything one reads in a government publication."


The judge pointed out, forcefully: "A member of the general public between 1995 and 2005 could not [have known] that if his employers went out of business just before he reached retirement age, he might get no occupational pension at all."

Judge Bean ruled that no reasonable secretary of state could disagree that the government's official information had been, variously, inaccurate, incomplete and inconsistent - and therefore "potentially misleading."


The other three points, made by the four "test case" claimants, were dismissed.

High Court, the Strand, London
High Court, the Strand, London

The judge disagreed with the Ombudsman that the Department for Work & Pensions (DWP) had been guilty of acting improperly by the way in which, in 2002, it altered the mathematical basis of an important pension scheme valuation measure known as the Minimum Funding Requirement.

He also decided that the claimants had no case under the Human Rights Convention.

They argued that their loss of pension entitlement amounted to loss of a "possession" under the convention.

But the judge agreed with the government that there was no positive obligation on it to intervene where a large group of people might lose money from pension schemes that were not under its own control.


The main finding that will give the government scope for continued resistance concerns the question of causation.

Parliamentary Ombudsman, Ann Abraham
Ann Abraham said the government was guilty of maladministration

Just because the government had published a lot of misleading information about the practical effect of its new pension laws, did it follow that this had led to between 75,000 and 125,000 losing their pension money?

The Ombudsman did not actually argue last year that the government's maladministration had caused the pensioners' losses all on its own, but that it had been a "significant contributory factor" in creating them.

However, the judge rejected outright the idea that everyone who lost pension money between 1995 and 2005 had in fact done so because of duff government information.

Describing such an argument as illogical and unreasonable, he said: "If the first finding [of maladministration] had been limited to the causation of injustice to any scheme member who had read the offending leaflets, or who relied on advice from colleagues or others who in turn relied on the leaflets, it would not be open to challenge."

Where now?

Considerable political pressure has built up on the government to do something.

It is considering its options.

Like the four claimants, it has been given permission to appeal on the point on which it lost.

Unless it decides on a considerable U-turn, the chances are that the courts will be considering this case again.

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