This piece first appeared on the Saga Magazine website 7 June 2007
The text here may not be identical to the published text

Pensions Victory - for now

The House of Lords has told the Government to improve the compensation paid to up to 125,000 people who were stripped of their pensions whose schemes were wound up before April 2005.

Peers voted by a majority of 55 to push through amendments to the Government’s Pensions Bill which will increase the compensation paid from 80% to 90% of the original pension, will pay it at the scheme’s original pension age rather than making people wait until they are 65, and will raise the pensions paid by 2.5% a year to help beat inflation.

Campaigner Andrew Parr, whose expected pension of £15,500 has been slashed by £6000 would get another £2600 from the amendments. Referring to four previous decisions in their favour by the Parliamentary Ombudsman, the High Court, the House of Commons Public Administration Committee and the European Court he said "We are very very pleased that everyone – apart from the Government – thinks we are in the right. Now it’s FIVE nil. I don’t see how the Government can resist it."

Pensions Minister Lord McKenzie of Luton told the House of Lords that the improvements would add £640 million to the £1.9 million cost of the existing Financial Assistance Scheme (FAS). But those costs are spread over at least 50 years. The amendments also provide for the cost of the FAS to be met from an estimated £3 billion of ‘orphan assets’ held by pension funds but whose ownership is unclear.

Campaigners say the changes will also allow money to be paid much more quickly. Lord McKenzie admitted that only 1236 people were being paid by the FAS out of around 10,000 who were already over 65 and should be getting their money. He blamed the poor administration of the trustees of the schemes and uncertainty about who was eligible.

But Dr Ros Altmann, who has acted as adviser to the campaign, told Saga it was the way the FAS worked that caused the problems.

"The government’s is doing this in the slowest and most painful way. This series of amendments would allow trustees to pay money now to everyone past their scheme pension age. They know what members are entitled to. They can pay them from scheme assets while the final position is worked out. They don’t need to know what the scheme can pay but that is where the delay is."

Despite the Government defeat by 181 votes to 126, victory for the campaigners is not certain. Seven weeks ago the House of Commons rejected the same series of amendments and the Pensions Bill will now have to go back to the Commons which could reverse the Lords’ decision.

Ros Altmann hopes that will not happen. "The Lords have said ‘enough is enough.’. My message to Government is – Take note of what has happened. Understand the urgency. Implement this now."

 


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