Sam Dunn: Pensioners kicked when they're lying down

Most bullies pick on easy targets, and I can't think of an easier one than a group of pensioners desperate to win redress for retirement income that was wiped out through no fault of their own.

The thug in question is the Government, which slapped campaigning pensioners in the face last week.

It did so by refusing to rule out chasing the Pensions Action Group (PAG) for legal costs if the Government wins a judicial review. The fight is over a ruling by the Parliamentary Ombudsman which laid much of the responsibility for the plight of the pensioners at Whitehall's door.

Usually, when challenged in the courts, government policy is to show restraint on pursuing legal costs.

But in a letter to the PAG's lawyers, the Department for Work and Pensions said that it needed to safeguard the public purse from the financial drain of defending its case, which could run to millions.

The Parliamentary Ombudsman, Ann Abraham, ruled in March that the Government was guilty of "maladministration" depriving at least 75,000 employees of "the opportunity to make informed choices about their future" before their company plans went bust. (They don't qualify for the Pension Protection Fund because their final salary schemes collapsed before it was launched in April 2005.)

Ms Abraham condemned the Government's general advice on the safety of final-salary schemes - in official leaflets - calling it "inaccurate, incomplete, unclear and inconsistent".

But the Government rejected her recommendation - that workers should have their pension rights restored - and stressed that the leaflets "did not claim to offer comprehensive financial advice" and were for general guidance only.

The unprecedented dismissal of a Parliamentary Ombudsman's report caused outrage - not just from the pensioners but from unions and MPs of all hues. This sparked a hearing held by the Public Accounts Select Committee - whose own report and recommendations will be published later this month - and provided the momentum for the judicial review.

Meanwhile, the Government's rejection of the ombudsman's ruling has been challenged in the European Court of Justice. It could be found guilty of failing to implement an EU directive that demands all member states protect pensions in the event of insolvency. Yet it has still demanded that affected pensioners who are not already signed up to the campaigners' case be excluded from any court award.

The only way to deal with this bullying behaviour is to stand up to it, and thankfully the campaigners have a pugilist of repute on their side: Ros Altmann. An economist, pensions specialist and former government adviser, she is adept at picking through legal complexities and willing to trade blows.

Her experience is vital, as the campaigners are up against a considerable foe.

This Government's sharp practice on pensions compensation is despicable and, in the context of the Parliamentary Ombudsman's conclusions, unjustifiable.

Since it can easily afford to put this one-off situation right, it should do so and drop its aggressive stance.

This would win back some of our our trust - something it needs in spades for reforms such as the semi-compulsory national pension savings scheme.

Right now, it's running on empty.

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