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Occupational Pensions

Volume 450: debated on Monday 16 October 2006

5. What further consideration he has given to the recommendations of the parliamentary ombudsman on occupational pensions. (93400)

We have been considering the ombudsman’s report in the light of the Public Administration Committee’s report on this issue and will publish the Government’s response shortly.

That is a very encouraging reply. Members will recall that the parliamentary ombudsman found that information provided by the Government to those taking out occupational pensions was

“inaccurate, incomplete, unclear and inconsistent”,

yet to date the Government have refused to take any responsibility. People outside and inside the Chamber will take great encouragement from my friend’s saying that the Government are now prepared to look at the matter again.

I thank my hon. Friend for that. I am sure that he, along with other Back Benchers, will welcome the fact that the Government have found £2 billion for this. It is in no way fair to say that we have done nothing about it. We recognised the plight of people in this situation and we are helping 40,000 of those affected by it.

Can the Minister confirm that although the 00 series for longevity has recently been published, most actuaries of occupational pension schemes still rely on the 92 series, which is based on statistics gathered between 1989 and 1992? Does he agree that that means that actuaries are very much out of date on longevity and underestimate the amount of pension fund deficits?

The hon. Gentleman is right to say that longevity statistics have traditionally underestimated what the change would be. We said that as part of our state pension reforms we will have regular reviews of longevity trends to ensure that we get the right figures as we move forward to raising the state pension age. However, that is not an issue that goes to the heart of our discussion about the ombudsman.

In a written question on 25 July, I invited the Minister to give an estimate of what partial restoration would involve and the cost incurred in response to the ombudsman’s report. The Minister replied that that could not be done because it was unclear what partial restoration meant. In responding to the ombudsman’s report, will the Government make some attempt at a gradation of what partial restoration may mean and the costs associated with that?

If I understand my hon. Friend’s question correctly, it depends on the number of years and the proportion of core pensions that we would expect to restore. However, we will not prejudge today our response to the Select Committee—we obviously have great respect for it and the ombudsman. We have set out in the past why we disagree with her findings, but the key point for all hon. Members is that £2 billion is in place to help 40,000 people.

The Minister knows that pensioners of British United Shoe Machinery in my constituency and elsewhere in Leicestershire are some of the worst affected by the collapse of the occupational pensions system. Dr. Ros Altmann has described it as one of the worst cases. I hope that the Minister can reassure me that the Government’s response will be relevant to my constituents who have been affected by the collapse and not simply brush off the ombudsman’s findings as some inconvenient piece of bad news.

We disagree that it is one of the worst cases of maladministration. Which bit does the hon. and learned Gentleman say is maladministration—the Conservatives’ implementation of the 1981 insolvency directive, the Pensions Act 1995, which the shadow Foreign Secretary took though the House, or the leaflets and the statements that the ombudsman criticises? We do not believe that it was maladministration. If the hon. and learned Gentleman does, is he saying that the Conservative Government got it wrong?

My hon. Friend knows that the substance of many of the issues that the ombudsman’s report covers could end up involved in some legal action. Although it would be inappropriate for us to discuss the substance of that, is he aware that some of the affected pensioners, who have already lost a great deal of money, would feel it to be unfair if, in the event of a court case that they lost, the Government sought to recover costs from them? Those people have already lost a lot. At least recovering costs should be taken off the agenda.

That is not what we have said. We have held a dialogue with lawyers, which was conducted on terms that were agreed across Government. All we said was that if those affected want to claim that their case fits the principles whereby the Government have agreed to waive costs in the past, they need to present that case. They have not yet done so.