The Ombudsman's Report
8. In March 2006 the Parliamentary Ombudsman found
that the inadequacy of government information amounted to maladministration,
and had meant that those in occupational pension schemes had not
realised the risks they ran, and had been denied the opportunity
to reduce them. The Government rejected this finding, and the
Ombudsman's recommendation for redress, although it did increase
the scope of the FAS.
9. Our own investigations led us to agree with the
Parliamentary Commissioner, and to press the Government to increase
the support available.[7]
In addition, four people who had lost their pensions judicially
reviewed the Government's rejection of the Parliamentary Ombudsman's
findings of maladministration in the High Court.[8]
The judgement in that case is being appealed by both parties,
and it would be inappropriate for us to comment further.
10. In the course of our original inquiry the Ombudsman
expressed her concern that the case might undermine the confidence
"that citizens can have that they will receive an effective
scrutiny of and outcome to their complaints".[9]
We shared her concerns. Subsequent events have shown that the
ombudsman system remains robust and effective.
11. Although the Government continues to deny that
any maladministration occurred, the Parliamentary Ombudsman's
intervention has already resulted in significant improvements
to the position of those whose pension funds wound up underfunded.
- Even though the Government
rejected the Ombudsman's report, it brought forward its review
of the FAS in consequence, and substantially improved the scheme.[10]
This initial improvement was itself significant; it meant that
some help was available for those within 15 years of scheme pension
age, rather than being restricted only to those within three years
of retirement.
- After our report and the subsequent
judgement of the High Court, the Government announced that the
FAS would be extended still further, so that all members of affected
pension schemes would receive 80% of their core pension entitlements.
That promise has resulted in the amendments to the Pensions Bill
already described.
- The Government's review of
the FAS will explore whether there are resources, other than the
public purse, which can be used to increase the funds available
to scheme members.
We recognize that the Parliamentary Ombudsman's
report has already resulted in significant concessions from the
Government, and significant improvements in the assistance available
to those who have lost their pensions. The Ombudsman system has
proved to be effective even in the face of Government resistance.
12. It might be argued that redress should be offered
to those covered by the Ombudsman's finding of maladministration,
rather than all those affected by the loss of their pensions during
the period in question. We consider on this that the Government
approach has been correct. The most effective response to the
Ombudsman's report is to amend the Financial Assistance Scheme,
particularly since some of the losses were due to policy deficiencies,
which fall outside the Parliamentary Ombudsman's remit, but which
Parliament can and should remedy. Our remarks apply to all those
in schemes which began wind up before the regime established by
the Pensions Act 2004 came into force.
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