The financial industry must be gazing in disbelief at the Government’s brazen refusal to accept the findings of its own ombudsman and compensate those who have lost their pensions when their company scheme wound up.The Parliamentary Ombudsman found the Government responsible for the worst pension misselling scandal of all time but ministers have just taken no notice. Everyone in the industry knows that, after Maxwell, the Government claimed that occupational pensions would be properly protected, with new laws and funding rules to ensure that schemes had enough money to pay all members’ pensions, whatever happened to the employer. This was not true. In fact, after 1997, changes to pension law significantly reduced protection for long-serving and older workers but the public was left in the dark. This scandal is far worse than Maxwell. The 32,000 Maxwell pensioners received their pensions but here are perhaps 100,000 being left without. Many of them have lost their state pension too, ending up worse off than if they had never put a penny into their company scheme at all. The Government encouraged them to contribute to their company scheme, assuring them that their pensions were safe, protected by law and even “guaranteed”. Financial advisers who behaved like this would be forced to compensate in full but ministers do not apply the same rules to themselves. Apart from the verdict of maladministration by the Parliamentary Ombudsman, the Government has also been found guilty of breaking European Union law. ASW unions appealed to the European Court of Justice and the Advocate General ruled that the 1980 EU insolvency directive requires member states to protect workers’ pensions fully on insolvency. The UK failed to do so. Interestingly, this ruling also suggests that the Pension Protection Fund may be illegal too and should replace pensions in full rather than only 90 per cent protection, up to a cap and reduced indexation. However, this will not help workers whose schemes have wound up in the past and are excluded from the PPF. But the fight for justice will not stop. The Parliamentary Ombudsman’s clear verdict is that the UK Government is responsible for this injustice and should arrange full compensation. If the Government refuses to accept its responsibility, it will face continued legal and Parliamentary challenges. The Commons public administration select committee is expected to release a highly critical report calling on ministers to rethink their stance. The Pensions Action Group will proceed with its judicial review of the Government’s unprecedented rejection of the ombuds-man’s report and the unions will go back to the High Court to insist on proper remedies for the breach of EU law. Unfortunately, however, the Government is trying to bully its way out of the legal challenges. Its heartless treatment of the victims of this disaster continues. For example, it has asked the European Court for a “temporal limitation”, which would allow it to compensate just the few hundreds of people specifically named in any court action, but leaving the other 100,000 or so without their pensions. Even worse, the DWP is threatening to bankrupt those Pension Action Group members who proceed with the judicial review. It says it may pursue them for “unlimited costs” if they challenge the Government and lose. Is this the way that a civilised, democratic Government behaves? Everything the Government has done to these people has been shameful. For example, the Prime Minister tried to frighten MPs into believing it would cost 15bn to compensate but the DWP has now admitted the real figure is only around 3bn. Since the Treasury’s removal of dividend tax relief in 1997 has taken over 3bn out of schemes every year, compensation is not really “unaffordable”. MPs are deeply unhappy at the dishonest treatment of their constituents. Even the Government’s claims about the “generous” Financial Assistance Scheme are untrue. The FAS has actually increased the injustices to those affected. It is really a political mechanism to placate backbench disquiet rather than a genuine attempt to alleviate hardship. It has only paid around 100 people out of the thousands already past their pension age, but has already cost the taxpayer millions of pounds in administration. In fact, this could sum up much of the Government’s pension policy since 1997. Say one thing, do another, waste a fortune and end up making the situation worse. If Money Marketing readers want to help to end this sorry saga they can ask their MPs to put pressure on ministers to uphold the Parliamentary Ombudsman’s verdict. If we really want to restore trust and confidence in pensions, the Government must compensate properly. The sooner we can put this matter behind us, the better for everyone involved in UK pensions.