The Government will argue in court that the 125,00 pensioners who lost their final-salary schemes should have taken financial advice rather than rely on Department for Work and Pensions’ leaflets.
But pension campaigner Ros Altmann has branded the defence as “nonsense”. She says the Government and the FSA compared “guaranteed” occupational schemes against private pensions at the mercy of the stockmarket and failed to encourage scheme members of trustees to seek professional advice.
The Government was hauled in front of a High Court judge on Tuesday after failing to submit evidence on time in the £3bn legal challenge.
Lawyers for the pensioners Binderman & Partners argued that the Government had effectively disqualified itself from the case by failing to respond to the legal challenge within 35 days, as required by law.
But Mr Justice Collins, who will conduct the judicial review into whether the Department for Work and Pensions was guilty of maladministration, allowed the defence.
Judge Collins said: “Things have been brought to a head with a slight judicial kick. For future reference, it must be borne in mind that proper procedures should be followed. “
The judge ordered the Government to pay the costs for the hearing and extended the deadline for the pensioners’ lawyers to submit their skeleton argument.
Altmann, who is head of the Pension Action Group which is backing the pensioners, says: “The Parliamentary Ombudsman has clearly explained that material such as leaflets are flawed and unacceptable and the DWP is seemingly oblivious to the standards of behaviour that financial companies and advisers have had to live by for many years. If advisers and companies imply safety where there is none, they have to compensate in full. Yet the Government believes it has no such obligation at all.”
She adds that the Government is abusing its power and has failed to give a satisfactory explanation for the additional delay. She says: “This sums up the appalling way that the Government has treated these pensioners.”
The Government is accused of wrongly assuring the pensioners that their schemes were safe, protected by law, or even “guaranteed.” The independent Parliamentary Ombudsman report supported this view but the Government has refused to pay compensation.
John Halford, a partner at Binderman & Partners, says: “The Government has an arrogant attitude that it can do what it wants and it does not matter what the court or the ombudsman says. It has broken court rules and ignored specific instructions given by the judge.”