1 Introduction
1. On 14 March 2006 the Parliamentary Commissioner
for Administration (the "Ombudsman") laid a report,
Trusting in the pensions promise: government bodies and the
security of final salary occupational pensions before Parliament.[1]
It was laid under section 10(3) of the Parliamentary Commissioner
Act 1967. Reports from the Parliamentary Ombudsman are normally
laid under section 10(4) of the Act, which gives the Commissioner
the duty to lay an Annual Report and the right to make special
reports from time to time. Section 10(3) gives the power to report
when the Ombudsman believes that complainants have suffered maladministration
leading to injustice "and the injustice has not been, or
will not be, remedied". It is used very rarely. Indeed this
is only the fourth occasion a report under section 10(3) has been
laid since the inception of the Ombudsman.
2. The Ombudsman's report dealt with members of final
salary occupational pension schemes which had wound up between
6 April 1997 and 31 March 2004 without sufficient funds to give
their members the benefits which had been previously promised.
The most recent estimates suggest as many as 125,000 people may
have been affected.[2]
Although the schemes were private, the Government prescribed the
legal framework within which they operated, and issued information
about them.
3. The Ombudsman found that Government maladministration
in producing misleading information meant that scheme members
were led to believe their pensions were entirely safe. They did
not have the opportunity to save in other ways, and suffered heavy
losses when their schemes wound up. The Ombudsman recognised that
there were many factors leading to scheme members' losses, but
recommended that the Government should consider whether it should
make arrangements for the restoration of full pensions to those
affected. The Department for Work and Pensions (DWP) has rejected
not only the recommendation, but the finding of maladministration
itself.
4. When such a rejection occurred in relation to
the Channel Tunnel Rail Bill in 1995, the Select Committee on
the Parliamentary Commissioner for Administration, the predecessor
to this Committee, immediately intervened. In its report it made
it clear that:
We have not assumed automatically that the Ombudsman
is right but have considered the arguments from the Ombudsman
and from the Department of Transport objectively and dispassionately.[3]
We have followed our predecessor's example, both
in our approach to the evidence and in referring the reader to
the Ombudsman's own report for a detailed account of the background
to this case.
5. We felt it was important to consider the Parliamentary
Ombudsman's report as quickly as possible, both because of the
importance of its subject and because of the Government reaction
to the Ombudsman's findings. We arranged three evidence sessions:
with the Ombudsman; with two complainants, Mr Bob Duncan and Mr
Andrew Parr, and Dr Ros Altmann, the advocate for the complainants;
and with the Secretary of State for Work and Pensions, Rt Hon
John Hutton MP. We also discussed the subject with witnesses from
other inquiries, where appropriate. We received many written submissions.
Our staff were assisted by colleagues from elsewhere in the House,
notably the Library, who had specialist expertise. We are very
grateful to all those who helped us.
6. This report is divided into two parts. The first
considers the substance of the Ombudsman's report, and the second
deals with wider constitutional issues that this case raises.
1 HC(2005-06)984 (hereafter the "Ombudsman's report") Back
2
The Department For Work And Pensions, Response To The Report
By The Parliamentary Ombudsman, "Trusting In The Pensions
Promise" June 2006, p.37 (hereafter the "Government
response") Back
3
Select Committee on the Parliamentary Commissioner for Administration,
Sixth Report of Session 1994-95, The Channel Tunnel Rail Link
and Exceptional Hardship, HC(1994-95)270, para 5 Back
| 
