IFAs across the country would have been right to feel smug last week when the Government got a dose of its own medicine. Last Tuesday, the Parliamentary Ombudsman revealed that it will investigate complaints about occupational pensions.Parliamentary Ombudsman Ann Abraham has written to MPs to tell them the investigation will focus on the actions of the Department for Work and Pensions, the Treasury, the Inland Revenue’s National Insurance Contributions Office and the Occupational Pensions Regulatory Authority. The move comes after around 100 complaints have come in to the ombudsman from members and trustees of UK pension schemes. These complaints are from employees and former employees of companies in administration and whose schemes are in doubt, as well as former employees of companies which are now insolvent and whose schemes have been wound up. Abraham will investigate allegations that “Government ministers and officials ignored relevant evidence when taking decisions on whether to warn scheme members of the risks to their pensions should their scheme wind up”. She will also scrutinise information and advice that Government bodies gave to scheme members and trustees. Much of the credit for the ombudsman’s decision to investigate the issue lies with lobbying by the Liberal Democrats and pension consultant Ros Altmann, the Government pensions adviser and governor of the London School of Economics. Altmann says: “It is wonderful news for the victims of this dreadful injustice that they may, at last, receive compensation for their suffering. They trusted the Government, trusted our pension system, but have been left in misery.” She claims that the Treasury and DWP ignored actuaries’ advice to warn members that being fully funded on the official minimum funding requirement did not offer security on wind-up. Additionally, Altmann argues that the DWP and Opra were “careless with wording of official booklets sent to trustees, which told them wrongly that the MFR guaranteed enough money in the scheme to meet liabilities on wind-up”. The investigation is expected to take several months and could end up with 5bn to 10bn in compensation for consumers. Altmann says: “The Government has so far refused to accept any responsibility for this injustice and has offered 400m over 20 years in a financial assistance scheme, which, if paid as 20m a year could restore pensions to around 100 people. This has merely raised false hope, and cannot address the scale of the problem.” She says legal advice obtained by the Parliamentary Ombudsman has cleared the way for an investigation to run alongside a case being brought by the Community Union challenging the legislation passed by Parliament. The union claims that UK laws did not comply with the 1980 EU Insolvency Directive. But the ombudsman also made particular note of the fact that it is unable to investigate a third allegation – that present legislation is inadequate to protect scheme members. This is because the content of legislation is a matter for Parliament. Abraham has also said that she cannot look into “advice and information provided by the FSA when acting in its own right” because these actions do not fall under her remit. Altmann says: “Instead, the ombudsman is looking at whether the administration of the laws passed by Parliament was carried out adequately and the way in which policy decisions were taken. “In particular, she has been asked by MPs to consider whether Treasury and DWP ministers ignored relevant evidence when taking policy decisions related to occupational pensions and the extent to which information provided by official bodies to trustees and members of occupational schemes was inaccurate and misleading and therefore misdirected those relying on this information.” Altmann says the probe is expected to require Government departments to release details of policy decisions and the rationale behind them. She says: “The Parliamentary Ombudsman has much wider powers than a court of law to demand information and can interview ministers directly. This will be a wide-ranging investigation.” If the ombudsman finds that maladministration has occurred and that this has led to an injustice, she could recommend remedies for those who have suffered loss which could mean compensation similar to misselling claims. Scottish Life group head of communications Alasdair Buchanan believes it is only right that the same standards which apply to the industry should be used for Government bodies and the public sector. “It is totally wrong if the FSA standards of true and fair representation are not applied to the Government,” he says. But Scottish Equitable pensions development director Stewart Ritchie is sympathetic to the Government’s plight. He says: “In hindsight, we would all do things differently but it is important to remember that this is not a free lunch. The Government is the people and if it were to have to compensate, this money would come out of the taxes of the very people it was compensating.” Buchanan disagrees, saying: “This is not the same group of people. If we do not have any form of accountability for the Government on the pension issue, then it will be a bad precedent for the industry.”
Jupiter Unit Trust Managers chief investment officer Edward Bonham Carter says he bel-ieves investors should be putt-ing cash for their children into emerging markets.
Norwich Union is charging 10 per cent on the first five years’ premiums for its price-busting non-stakeholder pension for the full advice market.
Abbey for Intermediaries is launching a new commission based payment package for intermediaries selling its Peace of Mind buildings and contents insurance and Paymentcase mortgage payment protection insurance.
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