but Pensions Minister says 'no' to more help
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Pensions Minister James Purnell has admitted to Saga Magazine that if he had lost his pension, as so many of our readers have lost theirs, he would be marching for compensation. "If it was me I would be campaigning too." Would he be taking his clothes off as the Stripped of Our Pensions campaigners will at the Labour Party conference? "I don’t want to get into the knockabout. But I understand why they are campaigning. If I was in their position I would be too." |
The admission came at the end of a half hour interview about what had been done – and should be done – to help the 125,000 people whose pension promise has been broken, often just months before they retired when it was far too late to do anything about it – except take their clothes off in public. I began by reading the Minister some of the stories sent to us by Saga readers. How did he react?
"Everyone has got sympathy for people who have lost their pensions and for that reason we introduced the Financial Assistance Scheme and concentrated the money on the people closest to retirement. But the argument that we should be paying full compensation has not been made. Remember these were companies’ pension schemes, often underfunded. The Government can’t write out a blank cheque to underwrite these things."
But did he at least accept the Ombudsman’s view that the leaflets the Government published were misleading? "I don’t accept they are misleading. These are general introductory leaflets and they said that people should not rely on them as a statement of the law and that they should get further advice."
Until 2004 the main Government leaflet – the 28 page ‘Occupational Pensions Your Guide’ – did not mention the risk to a pension if the company went bust and the scheme was wound up. The Department’s own guidelines state ‘accurate information would contain no significant omissions.’ Would he at least admit it was incomplete? "No. They are at a very high level of generality. We don’t accept that they were misleading." He was also impervious to the latest official body to support the Ombudsman. The Public Administration Select Committee of MPs said "…maladministration occurred. Government information about pensions was deficient and reasonable people would have been misled". The Committee called on the Government to enter discussions to provide a better compensation scheme. "The Government has not responded formally to the Committee and I wouldn’t want to pre-empt that but the Government did try to get industry to provide funds and spoke to the CBI and businesses. I don’t want to give people false hope that there is a pot of money out there."
Initially the Government said the cost of paying full compensation would be around £15 billion. But it emerged that was the total over 60 years and used inflation to boost the amount. In fact in today’s terms it is about £3 billion over that period and never exceeds £100 million in any one year. I put it to James Purnell like this. He earns around £100,000 a year from his jobs as MP and Pensions Minister. So it is like him spending an extra 5 or 6p a day. Wasn’t that truly insignificant?
"No it is not tiny. It is £3 billion and once you get into the billions it is significant money….
PL "But that is over 60 years. It never exceeds £100 million in a year, that is 0.02% of what the government spends."
"It is a significant amount."
So the answer to Saga’s first demand – full compensation for all 125,000 — was ‘No. Not our fault and in any case too expensive.’
But what about our second request – to speed up payments of the limited compensation paid through the Financial Assistance Scheme. More than 7000 people who are already 65 should be getting part of their lost pensions paid. How many were?
"Nearly 300 and we want to get the number up to near 1000 by Christmas. Payments are increasing but we totally accept that it is not enough. Working out what people are entitled to is incredibly difficult. We understand the frustration people feel. That is why we commissioned a review. We have decided to move some of the work to the private sector and eventually bring it all within the Pension Service.
PL: It’s more than frustration; some will die before they get paid.
"That’s why we did the review and can now make initial payments earlier."
The Government wants more people to save – did he accept that bad publicity around these problems works against that? "The issue of company pensions, and of course the stock market, have damaged confidence. But they are the context for the White Paper which is about moving away from a voluntary approach to saving and of course there is now the Pension Protection Fund which means there is a more secure backstop if a pension scheme is wound up. So the landscape has changed for the future."
And the past? Any chance of more resources. "It is a real personal tragedy for those involved. As a Government we have to strike a balance between sympathy for them and using taxpayers money. I hope that people will look at both sides of the argument before they judge us."
Campaigners will be taking their clothes off for some time yet.