Government refuses to pay compensation following highly critical pensions report

Ombudsman Ann Abraham, the Parliamentary watchdog, slammed the government last month for providing inaccurate, incomplete, unclear and inconsistent information about the security of final salary pension schemes.

Her report, Trusting in the pensions promise, dealt with complaints from members of private sector occupational pension schemes who have lost out as their schemes were wound up before the Pension Protection Fund (PPF) came into force last year.

The government rejects the charge of maladministration and is refusing to pay compensation.

Cases cited in the report included one pension scheme member who was likely to get only 14.9% of his expected benefits, and another who would probably only get 24% (including only 75% of his Guaranteed Minimum Pension entitlement).

The government has accepted only one of the recommendations, and is reviewing the time it takes to wind up defined benefit pension schemes.

Brendan Barber, TUC general secretary, said it was wrong to reject the report out of hand: “At the very least ministers must now increase funding to the Financial Assistance Scheme, and ensure that it starts paying out to the innocent victims of these pension scheme failures.”

The scheme offers help to some people who lose out because the scheme they were a member of was under-funded when it started to wind up and the employer is insolvent or no longer exists.