View more on these topics

Righteous Ros wins battle

Twice a year, the state decides to honour people who have either have performed a “vital” service for the community over many years or have enough spare change to donate to a political party and can afford to buy themselves a knighthood or some such title.

It is a reasonable bet that Ros Altmann, who has spent the last few years campaign-ing on behalf of more than 125,000 people denied a decent pension when their company pension schemes collapsed, will not be on either the next New Year or Birthday Honours List.

A pity really, given that she has masterminded one of the most single-minded campaigns in recent times, taking on the might of the Government in her battle for justice, including the Department for Work and Pensions and the Treasury.

Her battle looks like it may succeed, especially in the wake of last week’s High Court judgment, which found in favour of four “test cases” who were denied a pension when their schemes went belly up.

The muttering among MPs I have spoken to in the past few weeks, including several not normally considered to be natural rebels against the Government, is that it is about time that the DWP and the Treasury end their refusal to compensate those who have lost out.

The most likely outcome will be an announcement to the effect that the Financial Assistance Scheme, which has so far made paltry handouts to a few hundred potential claimants, will be bolstered so that something similar to the Pension Protection Fund is on offer instead.

This would mean pensions worth 90 per cent of any final entitlement under the old scheme before it went bust, up to a maximum of 26,050. Those already over official retirement age would receive 100 per cent of their final pension entitlement.

Of course, there is plenty a slip twixt cup and lip, as they say, and it is not inconceivable that the Government may appeal against the High Court ruling.

It argues that it has some grounds for doing so. The court hearing was brought to try to force the Government to accept a report last year by the Parliamentary Ombudsman to the effect that ministers had produced “inaccurate and misleading” leaflets reassuring workers that their occupational pension schemes were safe.

The judge last week said ministers’ attempts to argue the contrary could “only give comfort to those who consider that it is unwise to believe anything one reads in a government publication.”

However, at the same time, the judge also ruled that there was no “causal link” between the leaflets and the loss suffered by all those who have lost their occupational pensions.

It also rejected the ombudsman’s conclusion that the Government was guilty of maladministration when it made changes to the minimum funding requirement for pension schemes in 2002.

In my opinion, both of these findings are bizarre. As for the first, it is probably true that most of those affected did not obtain or read Government leaflets line by line to check whether their pension schemes were safe for them to invest in.

When I said as much two years ago, I remember my comments caused apoplexy among some campaigners. Ros herself sent me a few pained emails, pointing out that, in many cases, shop stewards and other union representatives were obtaining Government brochures and advising members on the suitability of joining company schemes based on the content in those leaflets.

That is certainly right, although I still do not think it applied to all of the 125,000 people affected. What is true, however, is that the Government’s misleading material on the subject contributed to the general sense of complacency about the safety of occupational schemes.

Anyone who looked through official literature would not have realised that the minimum funding requirement, which they thought ensured their pension fund had 100 per cent of all the assets needed to pay their full pension entitlement if something went wrong, actually meant nothing of the sort.

Which brings me to the second ruling. According to the ombudsman, the Government changed the rules so that after March 2002 MFR transfer values only had just above a 35 per cent chance (at ages up to 45) of providing the member’s pension.

For a 44-year-old, the changes meant the chances of meeting a full pension fell to 26 per cent. Meanwhile, punters were still being told their pensions were “guaranteed” and that the 100 per cent MFR rules meant that they would receive a full pension.

In my book, it is quite simple – if you change the rules, you have a duty to explain to the public what is happening and what the consequences might be. Yet the Government did neither.

So, where next for the Government? It has three options – it can appeal to higher court and ask to have the current ruling set aside. It could hypothetically offer compensation only to those who can “prove” that they were influenced by its leaflets in reaching their decision to join or stay in a company scheme. That would be madness.

Or it can pay up. Clearly, the amount it pays depends on the pressure brought to bear by MPs in the House of Commons, which means the campaign cannot let up.

In the meantime, if a damehood is not on the cards for Ros, maybe a sainthood will be. Should that offend Ros’s religion, perhaps being recognised as tzadic, or “righteous one”, might be more apt.


Cashing in on new Russian revolution

Ichose Russia as my favourite equity market for last year and have done so again this year. Now, I realise that this is an area where you should not put a big portion of your portfolio, yet it often seems to be an emerging market that performs best in a given year. I think Vietnam […]

FSA warned over change to offshore listing rules

The Financial Services Consumer Panel has written to the FSA to say that their proposals to amend the stock exchange listing rules for offshore investment companies threaten to undermine investor protection.Last December, the Association of Investment Companies called on the FSA to reconsider its latest proposals on listing rules for investment entities, warning of the […]

Out of Context

“I’m being asked to make a cup of coffee for a colleague. I’ve never made a cup of coffee in my life.”IN Partnership’s new associate director Arnie Laing tries to shirk his duties “I keep hearing about this thing called wrap. What is your interest in that then?” “Well, I quite like a bit of […]

Aifa and CII welcome FSA exam proposals

Aifa and the CII have welcomed FSA proposals to retain the existing exam regime for advisers.In a consultation paper published this week, the FSA announced plans to keep the current exam structure while reducing the Training and Competency sourcebook to a third of its size.The FSA says its long term goal is to remove the […]

A guide to automatic re-enrolment

Since the introduction of auto-enrolment in 2012, it has been a popular topic in the press. Recent media focus has been geared towards small and micro employers; however attention is set to return to the UK’s largest businesses as they prepare for re-enrolment. Johnson Fleming has produced a useful guide that provides essential information to help you […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm