The Department for Work and Pensions has admitted that Government statements may have led the public to believe their final-salary pensions were more secure than they really are.
Work and Pensions Secretary Andrew Smith told Channel 4's Liam Halligan that an FSA leaflet made final-salary pensions appear “safer than they turned out to be”.
Occupational Pensions Advisory Service chief executive Malcolm McLean told the documentary, How Safe is Your Pension?, aired at the weekend, that he believes statements in FSA brochures on the guarantees offered by final-salary pensions mean that the Government has misled investors whose schemes have collapsed.
The comments will strengthen the case for compensation for final-salary victims at a time when the Government faces its first defeat in the House of Commons, when an amendment to its Pensions Bill is expected to receive cross-party support next week.
The amendment, tabled by Labour MPs Frank Field and Derek Wyatt, is expected to get more support than the 200 MPs who signed Field's recent early-day motion calling for compensation.
Since then, Prime Minister Tony Blair has told Parliament that he wants a solution to the problem but to date no timetable for compensation has been given.
Field has proposed that compensation, estimated at £76m a year for the next 30 years, could come from unclaimed assets in accounts held by financial services companies.
Field says: “We are waiting on the Treasury and Number 10 for action. The alternative is that they face their first defeat in the Commons. This is not like top-up fees, this is about righting an injustice.”
Shadow Work and Pensions Secretary David Willetts says: “This is Andrew Smith admitting that pensioners have been let down by Labour. They thought their pensions were safe, now they can see that they are not.”