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As many as 125,000 people lost significant parts of their defined benefit occupational pensions when such schemes wound up between April 1997 and March 2004 without sufficient funds to pay the benefits promised. In March this year the Parliamentary Ombudsman published a report, Trusting in the pensions promise, which found that Government maladministration had meant that those who suffered loss had not realised the risks they ran, and had been denied the opportunity to reduce them. She recommended that the Government should consider whether it should make arrangements for the restoration of the core pension and non-core benefits of those affected. The Government rejected the findings of maladministration, and her recommendations.
We agree with the Ombudsman that maladministration occurred. Government information about pensions was deficient and reasonable people would have been misled. Moreover, the Government should have considered the Ombudsman's recommendations properly, rather than immediately assuming that they would place large burdens on the public purse.
This is the second time in less than 12 months that the Ombudsman has reported to Parliament that she has found injustice that has not been, or will not be, remedied. Only four such reports have ever been made. The system established by the Parliamentary Commissioner Act 1967 will only work if there is a common understanding between the Ombudsman, Parliament and Government as to what constitutes maladministration, and who has authority in identifying it. The Government has been far too ready to dismiss the Ombudsman's findings of maladministration. Our investigations have shown that these findings were sound. It would be extremely unfortunate if Government became accustomed simply to reject findings of maladministration, especially if an investigation on this Committee proved there was indeed a case to answer.
At the heart of every case of maladministration is someone who has suffered injustice. By concentrating its energy on denying findings of maladministration, rather than on considering what remedies might be practical and proportionate, the Government has caused further distress to complainants. It has delayed any resolution of their problems. We consider the Government should arrange more generous recompense than that provided by the Financial Assistance Scheme, and should do so speedily.
In future, we hope that the Government will engage with the Ombudsman positively, and start from the presumption that it is her job to determine whether or not maladministration has occurred, not its own. This is what Parliament intended when it established the office some forty years ago.
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