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Government loses pensions case
The Government has suffered a major defeat in the High Court over its refusal to pay full compensation to tens of thousands of people whose pension scheme has collapsed, writes Paul Lewis
Mr Justice Bean ruled that Ministers could not simply reject the findings of the Parliamentary Ombudsman Ann Abraham that the Government had been guilty of maladministration. And he ordered Secretary of State for Pensions John Hutton to reconsider his rejection of her recommendation that he should look at ways to restore in full the pensions of those who had lost out.
Saga Director Tim Bull said: “This is an historic day. The Court has ruled that the Government cannot simply dismiss with impunity the findings of the Parliamentary Ombudsman. Common sense and common decency have triumphed over injustice.”
The test case was brought by four of the estimated 125,000 people who have lost all or part of their pensions following the winding up of their pension scheme, usually after the collapse of their employer.
In addition to upholding their claim, the judge also ensured that their costs were met by the Government – and gave the Government leave to appeal further on condition it met those costs too.
Mr Justice Bean upheld the finding by Parliamentary Ombudsman Ann Abraham that there had been maladministration and that Government information about the safety of company pensions was “sometimes inaccurate, often incomplete, largely inconsistent, and therefore potentially misleading” and in a direct comment on John Hutton said that “no reasonable Secretary of State could rationally disagree with that view.”
He particularly criticised one Government leaflet which “makes no mention of the risks to…pension rights should a scheme be wound up with insufficient funds to meet all of its liabilities.”
The judgement comes just two weeks after a petition with 12,000 signatures of Saga members was presented by Saga Magazine editor Emma Soames to Pensions Minister James Purnell demanding compensation. Saga’s Tim Bull reiterated that today.
“The Government must now act urgently to put in place an effective compensation package to give the victims financial security and peace of mind.
“Our customers and readers have spoken with a powerful voice – the court has ruled. The Government can no longer afford to ignore the strength of opinion.”
Despite the judge’s strong criticism of the Government he warned that the Secretary of State might reconsider compensation as ordered but still come up with the same answer “the result may be the same but it will not necessarily be the same”.
So despite this victory the 125,000 pension victims face further uncertainty.
Commenting on the judgement John Hutton told the BBC: “We have not yet decided the grounds of appeal and have to discuss the matter with our lawyers and give proper consideration to the implications of this ruling. We do recognise that some people have lost out significantly.
“That is why we have put nearly £2.5 billion into a Financial Assistance Scheme to provide support for those close to retirement. We have every sympathy with these people who have lost money.”
A spokesman later confirmed that at today’s prices the cost of the FAS was in fact £783 million, spread over 50 to 60 years.
Dr Ros Altmann, the former pensions adviser to No 10 who has campaigned tirelessly for the pensions theft victims, saluted "a wonderful victory" but promised that the fight for full compensation would continue.
"So far, the FAS has been little more than political spin, designed to pretend it is providing help, when in reality it has failed to do so," said Dr Altmann. "Thousands of people are struggling without their pensions, tens of thousands have lost future pensions and yet just a few hundred people have had a penny of this 'assistance'.
"The Government’s behaviour all along has been shameful and heartless. It has focused all its efforts on denying its role in this affair, rather than owning up to its mistakes and organising a proper rescue."
* What do you think about the High Court ruling in favour of the pensions' justice campaigners? Have your say now on our messageboards
This article was created: 21 February 2007.
This article was last edited: 21 March 2007.
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