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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.

nic@inspiredmoney.co.uk

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