Up to 125,000 people who lost their savings when their occupational pension schemes were wound up should have sought indpendent financial advice, lawyers acting for the government will say.
This is one of the arguments submitted in the defence brief by lawyers acting for the government in the judicial review of its decision to reject the Parliamentary Ombudsman’s report and recommendations following the maladministration of occupational pension schemes.
The news comes a week ahead of the DWP's publication of the second White Paper on pension reform, the contents of which have been hotly debated for months with one of the main sticking points being the issue of individually tailored advice versus generic advice amid strong indications of the government’s preference for the latter.
The government was forced to go to the high court today after it failed to meet the 22nd November deadline to submit its defence case with the Pension Action Group arguing today that such a failure threatened to prejudice its own preparations for the hearing set for 7th February 2007.
Dr Ros Altman, a former government adviser and advocate for the PAG, says the government’s defence was lodged late last night ahead of today’s hearing in front of Sir Andrew Collins, the judge presiding over the case, who she also believes was close to banning the government from presenting a case at all because of repeated delays.
The government’s case, says Altman, offers “nothing new” but the fact the government is arguing the 125,000 PAG claimants should have sought independent financial advice shows the government “cannot be trusted” on personal accounts.
Defence papers submitted to the court on behalf of the government argue that: "Information provided by employers, scheme trustees and (through the trustees) professional advisers would have been (or should have been) far more influential. Even if some individuals were materially influenced by the [government]information leaflets, they would not have been justified in so relying upon them."
The papers further state the argument that official information was "potentially" misleading - falls some way short of finding that "all (or even some) individuals were in fact misled".
Altman says: “The government’s defence is that members should have sought independent financial advice but this was government paperwork which purported to tell members everything they needed to know about these pensions and obviously not enough thought was put into it.
“If they [the government] fail to compensate people can’t go ahead with NPSS either. These people were told their pensions were properly protected by law.
“The government wants to put generic advice into the NPSS but how can it be trusted?”
A DWP spokesman, says: "The issues around the judicial review are due to be considered by the court in February and it would not be appropriate to discuss them in public prior to the hearing.
"However, we have certainly never said that the reason we do not accept any charge of maladministration is because we told people they need to get financial advice.
"In general, government leaflets provide information in order to help people make decisions - they are not designed to give specific financial advice or suggest any particular route."
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 Matthew West on 020 7484 9893 or email [email protected].IFAonline
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till