With over 65,000 members of occupational final-salary schemes affected, the investigation, which is exp-ected to take several months, could result in the Government facing a £5bn- £10bn compensation payout.
Abraham will investigate the DWP, Opra, the Treasury and the National Insurance Contributions Office after getting around 100 complaints from members and trustees of occupational schemes. The FSA has escaped scrutiny.
Abraham will look at claims that in 2000, the Government ignored Institute of Actuaries’ advice to tell trustees that the minimum funding requirement did not guarantee accrued pensions. Official documentation reassured members that their pensions were safe until 2003, with no warning of risk.
She will also investigate whether the DWP and Opra were careless in the wording of advisory booklets sent to pension trustees, the impact of two relaxations of the MFR and whether delays in reconciling entitlements to guaranteed minimum pensions reduced payouts.
Independent pension consultant Ros Altmann says: “The victims are claiming full restoration of pensions they were promised and which they were told by the Government were safe and protected by law.”