Andrew Verity asked: “should Andrew Smith be praised or attacked for the dramatic last-minute amendment to the Pensions Bill?” (Money Marketing, May 27). He then goes on to say that he is politically neutral. It is a pity that people can't be neutral on pensions.
In the same issue of Money Marketing, pension consultant Ros Altmann says the FSA should be held responsible and that they should pay compensation. That means that the insurance industry is once again going to have to pay the compensation because where does the FSA's money come from?
Surely, the people who should be paying the compensation are the personal financial journalists, employees of the FSA, and trade union officials (individually) for leading people out of very good personal pensions in 1994 under the expert guidance of Helen Liddell and latterly Patricia Hewitt, who were vocal in their condemnation of IFAs. All of them made statements alluding to the fact that occupational pension schemes provided a guaranteed benefit.
Here come the double standards. Ros Altmann, Andrew Verity et al state that here was the written word “guarantee”. On the bottom of every illustration for low-cost endowment, it states that the benefits are not guaranteed, that only the death benefit is guaranteed and if it is an endowment insurance contract, that there is a sum assured to which bonuses will be added and they will be guaranteed.
Nowhere on any of those documents does it say that the mortgage amount will be guaranteed.
Where do Andrew Verity and Ros Altmann stand on that dilemma? On the pension front, occupational schemes, the press and others argue who said “guaranteed” and, therefore, who should be responsible for paying compensation, yet on the endowment front, we have an “implicit” (I think that is what the Treasury select committee referred to) guarantee which should result in compensation being paid.
If it was not so serious one could laugh oneself into a hysterical stupor.
Andrew Verity refers to the ASW workers who only have their unions to speak up for them. What were those unions saying when ASW workers with personal pensions were urged to seek compensation and have their money from their own personal pot paid back into an occupational scheme that has now got a huge hole in the bottom of its bucket?
Much of what is being said at the moment is conjured up by the trade union movement and much of 1994's situation was conjured up by exactly the same people using exactly the same misguided approach.
Life is about risk and insurance is about the protection of risk – we call it risk management – and if others interfere with the process of risk management then we end up, as Andrew Verity quite rightly says,with the Pension Act 1995 perpetuating what in many observers eyes is a ridiculous absurdity.
The absurdity is the ill-informed leading the ill-informed and of lobbyists paid huge salaries to haunt the corridors of power to follow their own political and commercial ends.
Andrew Smith should neither be praised nor attacked for his amendment to the Pensions Bill. What he should do, and what Government should do, is ensure that the individuals who promoted the misinformation, and that includes the two MPs that I have already mentioned, pay their proportion of the compensation, at Ros Altmann's £76m a year, for the next 20 years, to know what it is like to have one's shirt ripped off one's back.
The case histories that we have on ASW and other workers, coerced into moving from personal pensions to occupa-tional pensions can only conf-irm that personal choice and caveat emptor are far more effective mechanisms than busybodies postulating for personal gain.