FIRST REPORT
The Social Security Committee has agreed to the
following Report:—
INHERITED SERPS
1. The Social Security Act 1986 reduced by 50% the
maximum amount of State Earnings Related Pension that widows or
widowers could inherit on the death of their spouse, if they died
after 5th April 2000. The advance warning of the implementation
of the changes, of some 14 years, was designed to allow people
to plan their pension arrangements. The then Government gave assurances
during the passage of the Bill[1]
that it would mount a major publicity campaign to explain the
changes. There was a failure to do so. Incorrect leaflets were
issued and incorrect information given by local offices. This
failure persisted even after it came to official attention during
the passage of the Pensions Act 1995.[2]
Reports by the Public Accounts Committee[3]
and the Public Administration Committee[4]
following reports by the C&AG and the Parliamentary Ombudsman
highlighted the failure either to recognise the problems or effectively
manage the administrative process.
2. The Department of Social Security ('the Department')
does not have a duty to provide information on changes in law,
but where it does issue such material, it has a legal responsibility
to ensure that it is accurate and complete. This leads to the
paradoxical situation that, if the Department had provided no
information, there could have been no question of liability. The
Permanent Secretary of the Department said in evidence to the
Public Administration Committee[5]
that if the Department had not said anything about changes in
inherited SERPS, then technically it would not have been liable.
3. In normal circumstances the Department operates
a non-statutory scheme to offer financial redress for maladministration.
Under this it may make a special payment to any person who has
suffered a loss of statutory entitlement or an actual financial
loss as a result of misleading information or advice. Each case
is decided on its own merits. However, the Government announced[6]
that, in this instance, redress would be on a global basis and
that a claim for compensation would be considered from anyone
who could establish that the advice they received was inaccurate
and, as a result, acted to their detriment. Prompt action partially
to alleviate the problem was taken by proposing a delay to the
implementation of the change to 6th October 2002 (at
a cost of two and a half billion pounds) and asking the independent
Social Security Advisory Committee (SSAC) to conduct a public
consultation on the proposals for redress.
4. The SSAC issued a strongly critical report[7]
which rejected the Government's proposals, and proposed instead
a system of transitional protection for people over 60 or approaching
retirement age in 2002 when the reduced inherited SERPS provisions
come into effect. The Government then made a further announcement[8]
of an entirely new scheme which broadly encompasses the SSAC proposals.
The package will provide protection for more than one and a half
million widows and widowers over the next ten years[9].
The total cost (over 50 years) will be £12billion. Details
of the proposals are in the Appendix to the report.
5. In evidence[10]
the Secretary of State undertook to consult the Committee and
added[11] that the Department
had been re-organised in order to focus on those in receipt of
benefits, such as pensioners. The Government's firm intention
to implement the new scheme as soon as possible was confirmed
in the statement to the House:
"... the regulations
that will enable us to operate the scheme will be sent to the
SSAC and to others for comment. I do not want to mislead people.
The Government have decided that this is the course of action
that they will follow...I want to get the regulations through
the House as quickly as possible, so that the matter is dealt
with once and for all." [12]
The draft regulations were sent to the Committee
on 20 December.
6. The very poor administration which allowed this
mistake to be perpetrated and continued for some 10 years is of
very great concern to the Committee. The error is now going to
be corrected, but at enormous expense, using money which could
be much better spent in improving the lot of the poorest in our
society. We believe, however, that it is to the Government's
credit that it has responded to the representations of the SSAC
and others by announcing an entirely new scheme rather than persevering
with the compensation plan which would have led, in our view,
to severe problems of implementation, centred around the burden
of proof that claimants had been misinformed.
7. Having studied them carefully, we believe the
proposals contained in the draft regulations which will be laid
before the House are broadly acceptable and will give people a
reasonable time to make appropriate alternative arrangements while
protecting the interests of those who will be affected
in the period from 6 October 2002 when the transitional arrangements
start to be implemented.
8. Of course if the original plan had been properly
implemented the need for this expensive replacement would have
been avoided. Therefore the Committee is very concerned that
there should be a comprehensive publicity campaign announcing
the changes and that clear information (in various languages where
appropriate) should be widely disseminated via the media, the
Department's local Offices and at Post Offices. Those people who
have contacted the Department during the period of misinformation
and whose addresses are available to the Department should be
contacted directly. Furthermore we believe that the Department
should take all necessary steps to ensure that the implementation
of the scheme is undertaken efficiently and fairly. We shall expect
the Government, in its reply to this report, to give firm assurances
that the mistakes of the past will not be repeated and that the
implementation of the Inherited SERPS scheme will be undertaken
to the highest standards.
9. The Committee will observe the progress of the
scheme with great interest. We may wish to investigate the
implementation of the revised scheme for Inherited SERPS and consider
whether the reorganisation of the Department has delivered the
improvements which were expected. Since the scheme will come into
force from 2002 our successor Committee in a new Parliament may
also wish to follow up our inquiry.
1 HC Deb (1985-86) col 471, Standing Committee B Back
2
HC Deb (1994-95) 14 March 1995, col 818 Back
3
34th Report from the Committee of Public Accounts, HC, 1999-2000,
401 Back
4
5th Report from the Select Committee on Public Administration,
HC, 1999-2000, 433 Back
5
HC, 1999-2000, 433, QQ 21-22 Back
6
HC Deb, 5 March 2000, col 307 Back
7
Report of the Social Security Advisory Committee on the proposed
scheme for providing redress to those misled about the 1986 changes
to SERPS, 28 November 2000 Back
8
HC Deb, 29 November 2000 Back
9
See Appendix Back
10
Ev 12 July 2000. HC, 1999-2000, 717-i, Q1 Back
11
Ev 12 July 2000. HC, 1999-2000, 717-i, Q2 Back
12
(HC Deb, 29 November 2000, col 971). Back
| 
