Conclusions and recommendations
1. We
have made our own investigations. We believe the Government is
being, at best, naïve, and, at worst, misleading. (Paragraph
21)
2. In our view, the
nature of the Minimum Funding Requirement is not a matter of specific
and detailed advice: it goes to the heart of the legal framework
intended to protect pensions at that time. We fully accept that
the 1995 Act had been intended to improve safety for occupational
pensions, and may indeed have done so, but the explanatory material
issued should have made clear the limitations of any protection.
(Paragraph 32)
3. We agree with the
Parliamentary Ombudsman that the Government itself prescribed
the regulatory framework for occupational pension schemes and,
as such, was not a bystander. Once the Government had chosen to
give information about the pensions system, that information should
have been complete and accurate. Any limitations should have been
made clear. A reasonable reader would have expected the official
leaflets on pensions to have covered all the important points
about occupational pensions. In fact, they did not mention one
of the greatest risks. This is clearly maladministration. (Paragraph
33)
4. The Government
should have been aware that the Minimum Funding Requirement was
not properly understood by scheme trustees, let alone scheme members.
Official information on the MFR was limited, and the information
directed at prospective scheme members contained nothing about
the MFR at all. Government should have realised that more clarification
was required. (Paragraph 37)
5. A proper level
of accuracy in government information should be a basic principle
of good administrative practice; for many years, the information
provided on occupational pensions fell far short of this, and
of the Government's own declared standard. (Paragraph 40)
6. The Government's
response to our questions suggests there is little chance of recompense
for those who lost significant pension entitlements when their
scheme was wound up by a solvent employer. The Government cannot
simply abandon such people; if it is impossible to make employers
take responsibility, then it should do so itself. (Paragraph 54)
7. We believe the
Government should look again at what can be done. Like the Ombudsman,
we "want a response which is not about defensiveness and
denial, it is about constructive engagement and putting things
right … not into defending what has gone wrong." Like
the Ombudsman, we will not tell the Government what it should
do, or attempt to prescribe a precise level of compensation. We
expect the Government to work with others to put together a significant
package of support. The main elements of such a package should
include compensation for scheme members, regardless of their age,
measures to ensure payments begin at the age of 65, regardless
of whether a scheme's wind up has been completed, indexation for
pensions, and security for dependents' benefits. (Paragraph 57)
8. It is not unprecedented
for the Government to contest an Ombudsman's finding of maladministration.
It is, however, unprecedented for there to be so many problems,
in such a short space of time. Our scrutiny leads us to conclude
that the fault lies with the Government, not the Ombudsman. (Paragraph
70)
9. We share the Ombudsman's
concern that the Government has been far too ready to dismiss
her findings of maladministration. Our investigations have shown
that these findings were sound. It would be extremely damaging
if Government became accustomed simply to reject findings of maladministration,
especially if an investigation by this Committee proved there
was indeed a case to answer. It would raise fundamental constitutional
issues about the position of the Ombudsman and the relationship
between Parliament and the Executive. (Paragraph 78)
10. We trust that
this Report will act as a warning to the Government. We will continue
to monitor the Government's responses to the Parliamentary Commissioner's
reports. If necessary we will seek a debate on the floor of the
House, so that all Members can discuss these issues, and re-establish
the Parliamentary Commissioner's role. The Parliamentary Commissioner
is Parliament's Ombudsman: Government must respect her. (Paragraph
79)
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