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Ombudsman Poised To Launch Inquiry Into Pensions Advice
By James Daley, Independent News
August 5, 2004
The Parliamentary Ombudsman is preparing to launch an inquiry this autumn into the accuracy of Government advice over the security of occupational pension schemes, following allegations that its own literature falsely advised consumers that their retirement savings were guaranteed by legislation.
An announcement over the remit of the inquiry is expected before the end of next month and will come just weeks after the Ombudsman said it would launch a new inquiry into alleged Government maladministration over its regulation of Equitable Life. The investigation could last up to a year and may potentially leave the Government facing billions of pounds' worth of additional compensation payments for those who lost all or most of their occupational pension savings after their companies became insolvent. While the Government has agreed to put up £400m to compensate the 65,000 people who have already lost their pensions, campaigners estimate £2.2bn will be required.
The anticipated winding-up of the pension scheme of Turner & Newall, the UK car parts manufacturer owned by the insolvent US group, Federal Mogul, is expected to leave another 40,000 workers out of pocket. The Government has said these workers will neither be covered by its £400m nor by the Pension Protection Fund.
Campaigners led by Ros Altmann, the Government pensions adviser, and the Liberal Democrat MP, Steve Webb, met with the Ombudsman's office at the end of last month on the matter and are believed to have received a sympathetic response.
The group first submitted a complaint two months ago, before the latest developments at T&N. Ms Altmann says that if the T&N scheme is wound up, an estimated £75m each year for the next four decades will be needed to compensate those who have lost their pensions.
The allegations against the Government relate to literature produced by the DSS and Department of Work & Pensions and by the Financial Services Authority, which was initially under the control of the Treasury, which claimed until last year that defined benefit occupational pension schemes were guaranteed.
Kevin Brennan, a Labour MP and member of the Public Administration Committee said: "I certainly think the Ombudsman should look at what the Treasury advice was. Ros Altmann has made a very good case that the advice may have been misleading."
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