'Inaccurate, unclear' - the occupational hazard of pension schemes

What price your company pension scheme?

Last week's report by Ann Abraham, the Parliamentary Ombudsman, condemning the Government's mishandling of advice to members of final salary occupational pension plans, will have sent shivers down the spines of many workers.

"Inaccurate, incomplete, unclear and inconsistent" was her verdict on public information about the security of such schemes in literature that included leaflets from the Department for Work and Pensions.

Ms Abraham accused the Government of "maladministration" affecting tens of thousands of workers who, as a result of its misleading claims, "lost the opportunity to make informed choices about their future". More than 85,000 people lost their pensions when their company schemes were wound up after their employers went bust.

The Pensions Action Group is demanding compensation. As part of a protest campaign, its members stripped off outside the Treasury on Tuesday.

But the Government has rejected outright the Ombudsman's recommendations that those affected should have their pension rights restored.

Stephen Timms, the minister for pensions reform, called it a "huge and unsustainable leap of logic" to ask the taxpayer to pay up. He argued that government leaflets "did not claim to offer comprehensive financial advice" and were for general guidance only.

Amid growing anger at this reaction (see page 21), the Public Administration Select Committee, chaired by Tony Wright, Labour MP for Cannock Chase, now looks set to investigate the debacle.

For workers in final salary schemes, the Government has now set up the Pension Protection Fund. Funded by company levies, this pays compensation where any employer (from April 2005) becomes insolvent and where the pension scheme is underfunded.

For those in a final salary scheme who are already retired, the fund will pay out 100 per cent of their pension; workers still saving will get 90 per cent up to an annual £25,000 cap.

For workers in final salary schemes run by companies that went under before April 2005, the Government has set up the Financial Assistance Scheme. However, with just £400m in funding and tens of thousands of workers claiming on it, critics have warned that the scheme is hopelessly underfunded. To date, barely 30 people have received money from it.

Workers in "defined contribution" pension schemes - where you put money into a pension pot run by an outside fund manager, usually with help from your employer - don't have the same worries, says Tom McPhail of independent financial adviser Hargreaves Lansdown. "In theory, they should be fine because the money goes into a separate pot that is ring-fenced."

Independent Partners: 10 top tips for retirement. Get your free guide here

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Tax Manager / Accountant

    £35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

    Ashdown Group: Contracts Executive - City of London

    £35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

    Recruitment Genius: Call Centre Debt Collector - Multiple Roles

    £21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

    Day In a Page

    Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

    US betrayal of old ally brings limited reward

    Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
    VIPs gather for opening of second Suez Canal - but doubts linger over security

    'A gift from Egypt to the rest of the world'

    VIPs gather for opening of second Suez Canal - but is it really needed?
    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
    The male menopause and intimations of mortality

    Aches, pains and an inkling of mortality

    So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
    Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

    'How can I possibly be on the list with these writers I have idolised?'

    Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
    Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

    Bettany Hughes interview

    The historian on how Socrates would have solved Greece's problems
    Art of the state: Pyongyang propaganda posters to be exhibited in China

    Art of the state

    Pyongyang propaganda posters to be exhibited in China
    Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

    Vegetarian food gets a makeover

    Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
    The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

    The haunting of Shirley Jackson

    Was the gothic author's life really as bleak as her fiction?
    Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

    Bill Granger's seaside-inspired recipes

    These dishes are so easy to make, our chef is almost embarrassed to call them recipes
    Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

    Tourists are limp, leaderless and distinctly UnAustralian

    A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
    Blairites be warned, this could be the moment Labour turns into Syriza

    Andrew Grice: Inside Westminster

    Blairites be warned, this could be the moment Labour turns into Syriza
    HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

    The mystery of Britain's worst naval disaster is finally solved - 271 years later

    Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
    Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

    'I saw people so injured you couldn't tell if they were dead or alive'

    Nagasaki survivors on why Japan must not abandon its post-war pacifism
    Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

    The voter Obama tried hardest to keep onside

    Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen