Daily Mail ‘Monday View’ column – Ministers’ great pensions betrayal

by Dr. Ros Altmann

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So now it’s official.  No-one can trust the Government’s word on pensions.  That is the only conclusion to be drawn from the Government’s refusal to accept the findings and recommendations of the Parliamentary Ombudsman’s detailed, independent inquiry into occupational pensions.  Thousands of lives have been destroyed, because loyal hard-working citizens did what Government told them to do and believed the assurances of politicians at the time and official leaflets put out over the years, which told them their pensions were safe and did not mention that there was any circumstance in which they could lose some or all of their pension.

The Prime Minister says the taxpayer cannot afford to compensate.  He mentions a figure of £15billion which is totally misleading.  Pensions are paid over many years and the Government merely needs to set aside up to £150m a year for 40 or 50 years, to pay out the pensions.  This sum is tiny in the context of the DWP budget.  Last year alone, the DWP overpaid £130million in pension credit due to official errors.  

The Government’s excuses for not accepting its responsibility for this injustice are even more outrageous than its actions which caused the injustice in the first place.  It is trying to blame everyone else apart from itself.  First it says that the trustees were responsible protecting members’ interests, not Government.  How does that tally with Malcolm Wicks’ pronouncement, in Parliament in April 2000, ‘we are aware of the importance of protecting members’ rights.  If we cannot do that, they have no-one else to look to’.  The truth is that trustees could only protect the assets that were in the scheme, but they were not responsible for setting the scheme funding standards.  That was Government’s responsibility and it failed to ensure the legal funding requirements were adequate to pay pensions on wind-up.  It also failed to mention this risk to members at all. 

Ministers say the companies are to blame, but they behaved totally legally – and the law is set by Government.

Government even says members themselves are at fault because they relied on official assurances that their pensions were safe.  But that’s what all the official information, produced at taxpayers’ expense, told them.  These are the very leaflets which Ministers told Parliament were being produced so that the public could learn about the benefits and risks of pensions, from a source they could trust.  However, the leaflets did not mention anything about wind-up – the most important risk which scheme members faced. Now the Government says members should not have relied on this information or these assurances.  Well, they did, because Government told them they could.  Alistair Darling said ‘the public rely on Government information and they are entitled to be reassured that leaflets are accurate and comprehensive’.

The Turner reforms are now dead in the water.  No-one can safely put money into any National Pension Savings Scheme.  Even if Government encourages you to do so and tells you it will be safe – or even ‘guaranteed’ – you now know that these words mean nothing, because if you lose all your money you will just be told that the Government never meant what it said and it’s your own fault for believing it.

If this Government had deliberately set out to wreck pensions when it came to power in 1997, it has been tremendously successful.  However, if it actually meant what it said over the past 9 years about wanting to restore confidence in pensions, improve our pension system and encourage people to contribute to employer schemes, then it has been hopelessly incompetent. 

Government says that paying compensation to these people would set a dangerous precedent.  On the contrary, I think it is refusing to accept the recommendations of the Parliamentary Ombudsman that will create the most dangerous precedent.  It would suggest that any Government which makes a mistake in future can just pretend the fault lies with someone else and the citizens who are hurt will be left high and dry.  We must not allow the Government to undermine our Parliamentary democracy in this way.