Pensions deal 'blunder' condemned

Pensioners have held talks with Tony Blair

Plans to compensate millions of people over the Serps fiasco have been attacked by MPs.

The Commons Public Administration Committee condemned the administration of a scheme that aimed to give money to pensioners misinformed about the state earnings related pension.

Pensions Minister Jeff Rooker has called the original Serps mistakes the worst case of government maladministration since the war.

Millions of pensioners have been contributing to Serps since it was first introduced in 1978.

They had believed the scheme would ensure that their surviving partner was looked after in the event of their own death.

But in 1986 the Conservatives changed the rules so that the partners of people who died on or before 6 April 2000 could only receive half of their previous pension entitlement - effectively £50 per week.

The Labour government had already announced that the application of the new rule had been postponed and that delay has now been extended.

Several thousand pensioners are thought to be affected and the changes in the rules have confused many and angered others.

In August, the Commons Public Accounts Committee suggested that the mix-up could cost more than £13bn and take 50 years to put right.

The 1986 changes were properly publicised for only a year and pension information published in 1987 failed to mention the changes.

MPs also said in August that any compensation for those affected may not reach everyone as the Department for Social Security does not hold all their addresses.

Serps was set up in 1978 to provide a state second pension for those without occupational or personal pension schemes.