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

Finacial products from our partners
Property search
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: Mortgage Administration Team Leader

    Negotiable: Recruitment Genius: This company prides itself on its ability to p...

    Recruitment Genius: Mortgage Advisor

    Negotiable: Recruitment Genius: This company prides itself on its ability to p...

    Ashdown Group: Solvency II Project Manager - 10 month contract - £800 p/d

    £800 per day: Ashdown Group: A highly successful, global financial services co...

    SThree: Trainee Recruitment Consulant

    £20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250...

    Day In a Page

    Mullah Omar, creator of the Taliban, is dead... for the fourth time

    Mullah Omar, creator of the Taliban, is dead... again

    I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
    Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

    Margaret Atwood on climate change

    The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
    New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

    New Dr Seuss manuscript discovered

    What Pet Should I Get? goes on sale this week
    Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

    The cartoon hedgehog leading the way into a whole new reality

    Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
    Ants have unique ability to switch between individual and collective action, says study

    Secrets of ants' teamwork revealed

    The insects have an almost unique ability to switch between individual and collective action
    Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

    Donovan marks his 50th year in folk

    The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
    Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

    Simulator recreates thrill of F1 circuit

    Rory Buckeridge gets behind the wheel and explains how it works
    Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

    Twitter accused of 'Facebookisation'

    Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
    Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

    Jane Birkin asks Hermès to rename bag

    The star was shocked by a Peta investigation into the exotic skins trade
    10 best waterproof mascaras

    Whatever the weather: 10 best waterproof mascaras

    We found lash-enhancing beauties that won’t budge no matter what you throw at them
    Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

    Diego Costa: I go to war. You come with me...

    Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
    Ashes 2015: England show the mettle to strike back hard in third Test

    England show the mettle to strike back hard in third Test

    The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
    Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

    Charley Hull: 'I know I'm a good golfer but I'm also just a person'

    British teen keeps her feet on ground ahead of Women's Open
    Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

    Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

    Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
    Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

    Our choice is years of Tory rule under Corbyn or a return to a Labour government

    Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'