The Public Administration Select Committee has further boosted the campaign to compensate 125,000 workers who lost their pensions when their schemes wound up, by stating recent government concessions "have not gone far enough".
It is calling on the government to extend the Financial Assistance Scheme (FAS) to apply to all schemes which began to wind up before the regime brought in by the 2004 Pensions Act came into operation, which would mean including schemes which were wound up by solvent companies, as well as those which were insolvent.
In July the PASC held an inquiry into the government’s dismissal of the Parliamentary Ombudsman report ‘Trusting in the Pensions Promise’, in which it supported Ann Abraham’s finding that the FAS was not a sufficient remedy for their losses.
Following two court rulings - one from the European Court of Justice, and one from the High Court – the government has since increased the level of the FAS benefits, but the PASC says while these are welcome “they do not go far enough”.
The Committee also says the government’s decision to hold a review considering solvent employer schemes - which will report later in the year - is “not good enough”, and instead says it should take the opportunity of the current Pensions Bill to extend assistance to all those who lost their pensions.
A suggestion which follows the recent defeat of a cross-party amendment to the Bill proposing the establishment of a ‘lifeboat fund’ which would initially make payments using a government loan – which could then be repaid through unclaimed assets.
Tony Wright, chairman of the PASC, says the body fully understands the government’s “unease” at the taxpayer having to provide cover for pensions which were promised by, and which should be honoured by, employers.
However, he argues: “Those who have lost their pensions entitlements from schemes closed by solvent employers face exactly the same problems, from the same lack of regulation and lack of information, as those whose employers became insolvent. At this point, this is the only way they can be helped, and they must be.”
Dr Ros Altmann, independent consultant and pensions campaigner, suggests the imminent handover of power to Gordon Brown provides “the great test of whether he means what he says about a new approach to honesty, spin and Parliamentary democracy, and whether he really will usher in a new era as Prime Minister – or not”.
As she argues comments Brown made recently - suggesting £8bn had been added to the FAS - was a “whopper”, as “nine in every ten victims have not been paid a penny”.
She points out over 10,000 of the affected workers are already past pension age – with some their 70s, and some desperately ill – yet only 1,000 have received anything from the FAS.
Altmann says: “The rescue system this government put in place – the FAS - has turned out to be one of the worst bureaucratic shambles in Whitehall. It has only paid out about £4m and yet it has cost the taxpayer £10m to run. The claims of £8bn are just political spin, of the kind which Gordon Brown insisted last week he wanted to move away from.”
And she says government claims the FAS will now pay 80% of the pensioner’s lost income is misleading, as in reality it is 80% of income minus a tax free lump sum; inflation protection; a proper widow’s pension; ill-health provision - and in many cases with a loss of five years’ pension.
She adds: “We can only hope Brown himself has been misled and does not realise what he is saying is not actually true. If so, it is time for him to step in now and right this wrong.”
“The £8bn is spin. The 80% is more spin. Time is running out for the victims of this scandal and they are looking to Brown to organise a proper rescue immediately and acknowledge the government's responsibility for what has happened to them. They have had all the verdicts in their favour. The time for reviews is surely over, they need the money now.”
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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