| Government loses occupational pensions appeal |
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| Thursday, 07 February 2008 | |
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The Court of Appeal has slammed the Department of Work and Pensions’ decision to appeal against last year's High Court ruling on occupational pensions.
Around 125,000 people are thought to have lost their pension when their company schemes were wound up. On 14 March 2006 Parliamentary Ombudsman Ann Abraham ruled that the Department for Work and Pensions (DWP) had “acted maladministratively” by failing to warn pension scheme members that they had no more than a 50 per cent chance of recovering their pensions if the sponsoring company became insolvent or wound up its scheme before they had retired. Her report dealt with members of final salary occupational pension schemes which were wound up between 6 April 1997 and 31 March 2005 without sufficient funds to give their members the benefits which had been previously promised. Irrational The then Minister John Hutton responded the following day, rejecting the Ombudsman’s findings and recommendations that pensions be restored. In the first judicial review test case of its kind, however, the victims were forced to go to Court to argue that the Minister’s reasons for snubbing the Ombudsman were irrational. They also argued that the Minister had no power to act as judge in his own cause and that once the Ombudsman had ruled there was maladministration by his department’s officials, he was legally bound to accept that. After the then Secretary of State Peter Hain rejected the Ombudsman's recommendation to accept blame and compensate those who had lost their pension savings, the High Court ruled that the Government was effectively guilty of misselling company pensions to members. It is alleged to have done so by pretending their money was safe when in fact the Government's own rules meant there was no real safety at all. The Parliamentary Ombudsman, Parliamentary Public Administration Committee and High Court Judicial Review verdicts all agreed that the Government is responsible for what happened. Last December's extension of the Financial Assistance Scheme (FAS) will eventually ensure that all those who lost out should receive the equivalent of what they would have been paid by the Pension Protection Fund (PPF). Injustices The three appeal judges confirmed on Thursday that the Secretary of State's rejection of the Parliamentary Ombudsman's findings was irrational and unlawful. They also ruled that he must accept that his Department caused injustices which go beyond just financial losses. The verdict says the Government's mal-administration also led to a sense of outrage, distress, anxiety, uncertainty, lost opportunities to make informed choices about their pensions and denied them any chance to take remedial action to protect their pensions. The new Secretary of State for Work and Pensions, James Purnell, now wants to appeal to the House of Lords. “We are vigorously opposing the Government's request for leave to appeal to the House of Lords in this case. It is a waste of taxpayers' money and would just further prolong the suffering caused,” said Dr Ros Altmann, who advised the claimants. Dr Altmann said that the public should be told if company pensions were not really safe. “This will potentially be the case for hundreds of thousands of personal account contributors. The Government must not mislead them into a false sense of security. They should be warned before they are automatically enrolled into a pension,” he warned. Related articles
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