James Daley: Time to end the cover-ups
Saturday 29 September 2007
Dozens of workers who lost their pensions when their companies went bust once again turned up to attend a naked protest at the Labour Party Conference this week. It was the fifth year in a row that they had dusted off their "stripped of our pensions" banner, to show their frustration and disappointment at the Treasury's refusal to provide adequate compensation for them.
The victims of this scandal already had plenty to be angry about. Many were told by the Government that their pension schemes were totally safe – and so didn't worry about putting money into their plans, even as their companies ran into trouble. It was only when their employers went bust that they discovered that there were in fact no Government guarantees at all.
Last year, the parliamentary ombudsman ruled that the Government was guilty of maladministration and recommended that it pay compensation to the victims. And months later, the High Court upheld much of the report's conclusions. Yet the compensation scheme that is in place remains woefully inadequate, and is still only reaching a small proportion of those who have been affected. Many have already died, without ever receiving a penny of the pension they spent their lifetime saving for.
After years of refusing to improve the Financial Assistance Scheme (FAS), the rhetoric did appear to change when Peter Hain took over as Secretary of State for Work and Pensions a few months ago. He claimed that he wanted to enhance the terms of the FAS, and speed up payments – yet three months on from his appointment, nothing has changed.
Furthermore, the events of the last fortnight have illustrated just how easy it would have been for the Government to provide adequate support if it had wanted to.
The Chancellor, Alistair Darling, barely hesitated before volunteering to underwrite the entire banking sector last week – ensuring that thousands of Northern Rock savers (and those at other smaller banks which were potentially at risk) did not lose a penny of their savings. Yet customers of Northern Rock were never told by the Government that their money was safe when they opened their account. The victims of the occupational pensions crisis, however, were given such assurances – and yet the Treasury has failed to refund most of them their lost money – years after their schemes went bust.
The Financial Assistance Scheme only pays 80 per cent of their lost pensions, up to a maximum of £12,000 a year, has no inflation proofing, and excludes many of the affected schemes.
When challenged by the ombudsman and opposition parties to step up and provide proper compensation, it continually said it simply couldn't be expected to underwrite the mistakes of the private sector. Yet that's exactly what it did with Northern Rock last week.
Although things may be moving in the right direction, loose promises are worth nothing to those who are being forced to work well into their retirement, or who are in ill health and without their hard-earned savings. Every day that the Government drags its feet is another day of misery for the thousands of people affected by this scandal.
The cost of providing an emergency fund in order to help those who are most at need would be minimal – and much of it could easily be recuperated at a later date by pooling the assets of all the schemes that have been affected and managing them, rather than forcing them to buy annuities.
If Gordon Brown does call a snap general election this autumn, I hope that voters remember how cold-hearted he has been over the occupational pensions scandal. Many of those who have been affected are loyal, lifelong Labour supporters, who have been utterly deserted by the Government in their hour of need.
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
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