David Prosser: This government should be ashamed

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; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

One Direction's Zayn Malik gazes at a bouquet of flowers in the 'Night Changes' music video
'Free the Nipple' film screening after party with We Are The XX, New York, America - 04 Feb 2014
Arts and Entertainment
Russell Tovey, Myanna Buring and Julian Rhind Tutt star in Banished
tvReview: The latest episode was a smidgen less depressing... but it’s hardly a bonza beach party
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Claims Administrator

    £16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...

    Ashdown Group: Development Manager - Rickmansworth - £55k +15% bonus

    £50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...

    Recruitment Genius: Security Officer

    £16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...

    Ashdown Group: Business Analyst - City, London

    £50000 per annum: Ashdown Group: Business Analyst - Financial Services - The C...

    Day In a Page

    The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

    The saffron censorship that governs India

    Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
    Prince Charles' 'black spider' letters to be published 'within weeks'

    Prince Charles' 'black spider' letters to be published 'within weeks'

    Supreme Court rules Dominic Grieve's ministerial veto was invalid
    Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

    How did fandom get so dark?

    Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
    The galaxy collisions that shed light on unseen parallel Universe

    The cosmic collisions that have shed light on unseen parallel Universe

    Dark matter study gives scientists insight into mystery of space
    The Swedes are adding a gender-neutral pronoun to their dictionary

    Swedes introduce gender-neutral pronoun

    Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
    Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

    Disney's mega money-making formula

    'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
    Easter 2015: 14 best decorations

    14 best Easter decorations

    Get into the Easter spirit with our pick of accessories, ornaments and tableware
    Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

    The future of GM

    The greenhouses where Monsanto 'plays God' with the future of the planet
    Britain's mild winters could be numbered: why global warming is leaving UK chillier

    Britain's mild winters could be numbered

    Gulf Stream is slowing down faster than ever, scientists say
    Government gives £250,000 to Independent appeal

    Government gives £250,000 to Independent appeal

    Donation brings total raised by Homeless Veterans campaign to at least £1.25m
    Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

    The most borrowed book at Bank of England library? Oh dear

    The book's fifth edition is used for Edexcel exams
    Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

    Cowslips vs honeysuckle

    It's the hunt for UK’s favourite wildflower
    Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

    Did a botched blackmail attempt help Cyril Smith escape justice?

    A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss
    Tony Blair joins a strange and exclusive club of political leaders whose careers have been blighted by the Middle East

    Blair has joined a strange and exclusive club

    A new tomb has just gone up in the Middle East's graveyard of US and British political reputations, says Patrick Cockburn
    Election 2015: Meet the top 12 wacky candidates seeking your vote in May

    Election 2015

    Meet the top 12 wacky candidates seeking your vote in May