David Prosser: This government should be ashamed
Saturday 27 January 2007
Just what does it take to force the Government to do the right thing by thousands of people who have lost their pension savings? On Thursday, the European Court of Justice (ECJ) ruled that Britain had failed to properly implement European Union insolvency laws designed to protect the pensions of people whose employers go bust.
The ECJ ruling followed a judgement last year from the Parliamentary Ombudsman, who said the Government had previously - and repeatedly - misadvised savers that their pensions were safe.
Yet, still ministers refuse to offer these victims of injustice proper compensation. Those who lost their pensions before the Pension Protection Fund (PPF) was launched two years ago will get just a few pennies from an emergency fund. And even those who can claim on the PPF are entitled to only 90 per cent of what they're owed, up to a maximum of £26,000.
It's worth a recap of the facts, for anyone who thinks this is a complicated issue. For years, the Government advised people that putting money into a final-salary pension scheme run by their employer was an excellent way to put money by for their old age. For many people, such schemes have provided good benefits, but a sizeable minority have lost out.
Up to 125,000 people, going back 20 years, have lost some or all of their pension savings because their employers failed to properly fund the schemes and then went bust.
It's a simple story with a desperately unfair ending. When the scandal emerged, the Government refused point-blank to consider any compensation for those who had lost out. When Labour MPs threatened the biggest backbench rebellion of the past 10 years, ministers were forced to set up the emergency fund and the PPF. But despite the rulings from the Ombudsman and now the ECJ, the Government will not accept people should be compensated in full.
The longer this row goes on, the greater the number of people who will die without their cases being resolved. Thousands of people who had once been looking forward to a comfortable old age have already spent years of their retirement in poverty.
There's no doubt paying proper compensation would be expensive, but pension experts have presented the Government with several solutions that would spread the cost over many years, reducing the burden on the Treasury's coffers. Some campaigners have even suggested compensation could be funded by money from the unclaimed assets held by banks and other financial services companies.
But the argument about how compensation payments should be funded is a secondary one. The bottom line is that the victims of this scandal have been badly let down by the Government and its predecessors. Any further delays in making proper redress will simply add to ministers' shameful failures.
nnn Still on pensions, think twice about accepting a financial inducement from your employer in return for opting out of its final-salary pension scheme. Despite the lost pension scandal - and as long as you work for a well-run company that isn't heading for failure - a final-salary scheme remains the gold standard when it comes to retirement savings.
However, companies are keen to close them down. The Pensions Regulator has become increasingly concerned about the payments some employers have been offering staff in order to persuade them to withdraw from final-salary plans, particular since HM Revenue & Customs has confirmed the money would be taxable.
The regulator has told employers they need to give staff much clearer information about such deals - and warned employees to take independent financial advice. In an ideal world, employers would pay for this advice.
While the deals may look tempting overall, even after the payment, you may end up worse off by accepting your boss's offer.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Three of Pope Francis' relatives die in Argentina car crash, including two young great-nephews
- 2 Michael Brown shooting: Amnesty International sends team within US for first time as National Guard deployed
- 3 Reading Festival 2014: Tesco branch replaces salad with Jager and potatoes for vodka as campsite opens tomorrow
- 4 Here’s the damning letter Robin Williams wrote to his Mrs Doubtfire co-star's principal after they expelled her
- 5 Ferguson protests: 90-year-old Holocaust survivor Hedy Epstein ‘arrested’ by police during St Louis demonstrations
Isis threat: Cameron wants an alliance with Iran
Crisis? What crisis? A visiting US doctor gives the NHS a rave review
Ukip MEP calls for reintroduction of death penalty on fiftieth anniversary of last deaths
Russell Brand calls for Israel boycott: Comedian urges big businesses that 'facilitate the oppression of people in Gaza' to pull funding
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
World peace? These are the only 11 countries in the world that are actually free from conflict
iJobs Money & Business
£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...
£30000 - £44000 per annum + Bonus+Benefits+Package: Harrington Starr: Web deve...
£40000 - £65000 per annum + benefits+bonus+package: Harrington Starr: Senior A...
£35000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Web deve...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony