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Massive blow for Government as High Court rules in favour of pensioners

The High Court has ruled in favour of pensioners that lost most or all of their final salary schemes when there employers went bust and ordered the Government to pay compensation.

The ruling has been described as a massive blow for the Government, which was accused of unlawfully ignoring the Parliamentary Ombudsman’s report.
This found it guilty of maladministration by sending out misleading leaflets to the pensioners assuring them their pensions were safe.

The Government has now been told to pay compensation by the Parliamentary Ombudsmann, the Public Administration Select Committee, the European Court of Justice, and the High Court.

The Government has claimed that the cost of compensation could run to £15 billion although the true cost is likely to be nearer to £3 billion to £4 billion.

The case was brought by just four pensioners but around 85,000 pensioners are thought to be in a similar situation. Pressure on the Government to compensate all of them will inevitably increase.

Over half of all the MPs in the Commons have now signed Early Day Motions to support compensation.

Ros Altmann, head of the Pensions Action Group representing the pensioners, says: “The Government faces defeat, yet again, on this issue, as the Pensions Bill goes through the House. The cost of compensation need not be frightening _ a commitment of £100-£150m a year, for about 60 years, or a sum of £3billion set aside today would be enough to settle this matter once and for all. Taxpayers do not have to foot the whole bill, but Government must organise it. So much taxpayers money has already been wasted on the FAS and also on defending this case in court, rather than using that money to provide proper compensation. There are billions of pounds in unclaimed assets that could be used. If Government has wronged people, it cannot just claim the cost of righting the wrong is too high _ it has to find a way.”

Liberal Democrat Work and Pensions Secretary, David Laws MP says:

“This is a fantastic ‘David versus Goliath’ victory for the pensioners who have fought for justice.

“This is the third strike against the Government’s disgraceful attempts to duck out of paying compensation, after the Ombudsman’s Report and the Public Administration Select Committee Report. After three strikes the Government must surely accept that it is out.

“Ministers must now set out how fair compensation will be paid to those who lost their pensions after Government maladministration.

“If the Government refuses to act after this decision we will table an amendment to the Pensions Bill forcing them to act.”

Hargreaves Lansdown head of pensions research Tom McPhail says: “If the government does not now make full compensatory payments to these pensioners, then the conclusion is clear: when it comes to pensions, you simply can’t trust the government. Remember this fact when they start trying to enrol everybody into their National Pension Savings Scheme in a few years time.

“One further particularly grubby aspect of the government’s behaviour in all this, is that it has held over the complainants the possibility that if they lost, then the government would pursue them personally for costs. Given the scale of this case, this would almost certainly have bankrupted them.

“The government in general, and Gordon Brown in particular, have come out of this affair looking like mean-spirited bully-boys.”

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