Select Committee on Public Administration Sixth Report


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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