COMPENSATING PERSONNEL WHOSE PENSIONS
WERE IMPROPERLY TAXED
129. In our evidence in December 2002, we questioned
the then Minister about the situation which had led to the pensions
of well over 1,000 veterans being improperly taxed, often over
the course of many years. The FPS tells us that "these men
have suffered severe financial pain over many years".[152]
130. We welcome the expression of regret by the then
Minister for what had happened:
Let there be no mistake about it, this is something
the Department is taking very seriously indeed and something which
we are determined to put right. That is no compensation and no
consolation for those who lost out over the years when the money
would have been of most value to them.[153]
131. The FPS suggests that these men or their dependants
should be compensated "at a rate which ensures they are no
worse off than they would have been if they had lent their money
to Government through National Savings plus an element for damages".[154]
We agree.
This was the Government's mistake, and veterans and their families
have already suffered enough for it. They deserve proper recompense.
132. We heard from the then Minister that many of
the victims had already received some compensation, but that not
all had been identified, and that a final package of compensation,
including, for example, the level of compound interest to be paid,
had not yet been finalised. This package has still not been finalised.
133. The Minister told us in December 2002:
I would certainly expect this to be done within
the timescale of the other cases we are reviewing which we hope
to have completed by the summer, and I would hope I would get
it done much more quickly than that.[155]
Yet, when the current Minister for Veterans came
before us, nearly a year later, and well beyond this deadline,
he told us that the Government was "still considering whether
to pay compensation in addition to the repayment supplement that
has already been provided under the Inland Revenue's legislation",
promising us a decision "no later than 18 December".[156]
The FPS regards the delay in finalising this package as "extremely
shabby treatment" of the former personnel involved, many
of whom are very old, and some of whom have died over the last
year.[157]
134. The MoD has repeatedly set itself and then missed
deadlines for finalising compensation payments to former personnel
whose pensions were improperly taxed. The delays so far are unacceptable.
We expect
a package of compensation to be announced by 18 December, as promised,
to be implemented promptly and to include compensation along the
lines of that recommended by the Forces' Pension Society.
142 
