Pension campaigners are preparing to take the Department of Work and Pensions to court for a second time over its failure to provide proper compensation for workers who lost their pensions when their occupational schemes wound up.
Solicitors acting for the Pensions Action Group (PAG) have written to the DWP notifying it of the organisation’s intention to seek a Judicial Review of the recent decisions to extend the Financial Assistance Scheme.
Dr Ros Altmann, independent consultant and former pensions adviser to the government, says campaigners have given the DWP one week to respond to the letter before claim, and will be applying for an expedited hearing based on the urgency of the situation.
She says the Judicial Review will focus on two main arguments by campaigners:
- The extensions to the FAS do not comply with the High Court ruling against the Secretary of State in the earlier Judicial Review
- The decision to include only some of the solvent employer schemes, while excluding others, is irrational, discriminatory and unlawful
Altmann says John Hutton, Secretary of State for Work and Pensions, has failed to comply with the ruling of the High Court in February to reconsider the FAS in light of the fact the DWP was guilty of maladministration as found by the Parliamentary Ombudsman in her report ‘Trusting in the Pensions Promise’.
In addition Justice Bean ruled no Secretary of State could ‘rationally disagree’ that the government had misled scheme members about the security of occupational pension schemes, however Altmann points out in March the DWP announced it would be appealing this verdict as it had "raised important constitutional issues which need to be resolved".
As a result Altmann says Hutton’s position on this issue is “irrational and illogical” as while the DWP is appealing the ruling, the Secretary of State has said the latest extensions to the FAS have been made because he accepts the department is guilty of maladministration.
She adds: “The government’s position on the plight of these victims of scheme wind-ups is incoherent and appears to consist of a series of knee-jerk reactions to unfolding events with no proper strategy of actually solving the problems it has created for tens of thousands of people.“
“Piecemeal extensions to the FAS have been announced almost weekly, but these have not helped the people who need money most urgently.”
And Altmann argues while the DWP has announced a review to investigate how to increase the FAS payments to the levels of the Pension Protection Fund (PPF), the review will not report back until the end of the year.
“This means any recommendations it makes may not be introduced until 2009. This will be far too late for those worst affected. The government’s decision to embark on yet another review is perhaps convenient politically, but is merely prolonging the agony for the victims.”
In addition the PAG want the Review to consider the position of solvent employer schemes, as it says the Parliamentary Ombudsman, Public Administration Select Committee (PASC) and High Court made no distinction between different employer sponsors, so the DWP’s decision to only include some of these schemes could breach Section 6 of the Human Rights Act.
Altmann says: “Sooner or later, the government surely knows it will have to provide a proper resolution to this issue. There is widespread agreement, both inside and outside Parliament, that a fair resolution cannot be achieved at levels below those offered by the PPF.”
“After the new extensions, the amount of extra money required is something like £20m a year – it is simply not credible for the government to keep saying ‘taxpayers can’t afford this’. I really hope another round of pressure will finally force Ministers to allow the victims to get their lives back now, before it’s too late.”
However, a spokesperson for the DWP says: "We reconsidered the Ombudsman's recommendation on the basis that there had been maladministration, as directed by the Court, and have come forward with an £8bn assistance package - £1.9bn in net present value - so all 125,000 who lost their pension when their employer went bust will get 80% of their core expected pension."
"This represents a significant increase in funding from the taxpayer. In addition, we have launched a review to look at whether better use can be made of assets in winding-up pension schemes, and whether other sources of non-public funding could boost assistance levels further."
"We believe we conducted our reconsideration properly and that it complied with the High Court's order."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email [email protected]IFAonline
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