Money News: Pensions compensation battle to be fought out in the High Court

Tens of thousands of victims of failed company pension schemes have lodged a request in the High Court for a judicial review of the Government's refusal to compensate them.

Ros Altmann, a former adviser to Downing Street, is working with the Pensions Action Group (PAG), whose members are fighting to restore the rights of those who have lost occupational pensions. They are aiming to overturn an earlier decision to ignore recommendations made by Ann Abraham, the Parliamentary Ombudsman.

The Pension Protection Fund (PPF) provides compensation for workers who have lost final-salary pension rights. But only firms that have gone bust since the inception of the PPF last year are covered.

A report by the Ombudsman in March highlighted the plight of more than 85,000 workers whose company schemes were wound up when their employers went into administration and who do not qualify for compensation from the PPF. Instead, they have to rely on money from a separate £400m fund, under the Financial Assistance Scheme. Critics argue that its reserves are inadequate.

Ms Abraham's report found evidence of "maladministration" by the Government. She claimed it misled workers in its official literature by encouraging them to invest in their company pension schemes without mentioning the risk that they might lose their money if a scheme was wound up.

Despite this criticism, the Ombudsman's calls for compensation were rejected. Now Ms Altmann has served papers against John Hutton, the Secretary of State for Work and Pensions, to try to overturn that decision. She describes the official response to the report as "irrational and unlawful".

"Its rejection was based on misleading estimates of potential costs to the taxpayer," Ms Altmann said. "Calculations attempting to justify the estimated £15bn cost of compensation are misleading and flawed, since the proper figure is between £2.9bn and £3.7bn."

Standard Life: Windfalls bruised in falling market

Standard Life has cut the expected value of its stock market flotation, leaving policyholders facing share windfalls lower than expected.

The insurer had thought it could sell the shares to investors at between 240p and 290p. This would have given the company a market value of up to £5.5bn, and average windfalls of £1,700.

But last week, the group said its shares would be priced at between 210p and 270p, to reflect falls in share prices over the past month. This is likely to cut the average windfall to £1,500.

The final offer prices will be announced by 9 July, the day before the insurer is due to list on the Stock Exchange.

Details also emerged of its discounted share offer promised to all members if a vote for demutualisation was secured. Qualifying policyholders can buy up to £50,000 worth of shares (in addition to those allocated at the float) at a 5 per cent discount to the offer price.

Last month, Standard Life members voted overwhelmingly in favour of demutualisation: 98 per cent supported the board's plans.

Around 2.4 million members are eligible for windfall shares, and must now choose whether to keep their shares, buy more or sell them.

Mortgage lending: First-timers borrow up to the hilt

First-time buyers have stretched their finances to record levels as they try to get on the property ladder.

Figures from the Council of Mortgage Lenders show that in April, first-timers borrowed an average multiple of 3.21 times their income (£106,000), up from 3.15 times income in March and the highest multiple for two years.

Those moving up the ladder borrowed an average of 2.93 times income, up slightly from the previous month.

Generally, lenders have limited their advances to three times an individual's income (or 2.5 times the combined earnings of a couple) to ensure people do not borrow more than they can afford. But soaring house prices and lower interest rates are causing these rules to be relaxed.

However, the proportion of a first-timer's salary spent on repayments is falling. This is thought to be due to the availability of cheap, fixed-rate loans.