The government's refusal to accept the findings of today's parliamentary ombudsman's report on pensions is an outrage, writes Deborah Hargreaves, the Guardian's business editor.
The ombudsman has asked ministers to pay compensation to about 85,000 people who have lost all or part of their pensions because their companies have gone bust. Many of these are vulnerable, elderly people who have saved for retirement with faith in their company scheme to provide for them. They were encouraged in the 1990s to opt out of the state second pension and put their savings into occupational schemes. Government advice assured them that these schemes were safe, even guaranteed, when they were anything but.
What happened is that these company schemes did not have sufficient funds to pay all of their members' pensions. When companies like Allied Steel & Wire went out of business, the pension fund was wound up, but did not have enough money left to pay out for all of its members' retirement income. Many of these older people have lost all of their savings and have been forced to take jobs or live off benefits.
How can ministers persuade people to save more for retirement when this is what happens to hardworking people who were only following the advice at the time? Trying to wriggle out of responsibility for the decisions of these people is disingenous. Government was warned in 1999 that its pension rules were not tight enough and that there was the risk of a high-profile collapse. These pensioners are victims of misleading and often inaccurate information given to them by government departments. The least ministers can do is make good some of their shortfall.
