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Pensions: Parliamentary Ombudsman's Report

Volume 686: debated on Thursday 2 November 2006

My honourable friend the Minister of State for Pensions Reform (James Purnell) has made the following written Ministerial Statement.

The Government have today published their response to the Select Committee's examination of the Parliamentary Ombudsman's report Trusting in the Pensions Promise (Cm 6961).

The Government have, and will continue to have, absolute respect for both the office of the ombudsman and its office holder. While there have been instances in the past, under different administrations, of a Government not accepting a finding of maladministration by the ombudsman, such instances have been highly exceptional and the Government have every intention that they should remain so in the future. The Ombudsman has, and will continue to have, the total and unqualified respect of the Government.

The Government agree with the committee that there should be a significant package of support and believe that the financial assistance scheme, as extended, constitutes such a package. The Government have, however, looked again in the light of the committee's report at what extra support can be made available within the existing framework. One option, which is not being widely taken up currently, is “deemed buy back”. This is a facility which, provided certain conditions are met, reinstates a member of an underfunded contracted-out pension scheme into the state additional pension for the period they were in an underfunded scheme, at less than cost.

“Deemed buy back” needs to be carefully considered on an individual basis but despite this we believe that this facility could provide useful help. While the pensions industry should already be aware of “deemed buy back”, the Government are planning to publicise these arrangements more widely and proposes to work with interested parties to investigate what more should be done in this respect. We also intend to examine whether the department can produce a tailored forecast for each person who qualifies for “deemed buy back” of the additional pension they could receive.

We note and accept the committee's view that the Government's response should not be defensive and we have approached the committee's report in that spirit. However, we continue to believe that the information issued by the Government was not misleading and that the Government are not responsible for the losses in question.

Copies of the Government's response are available in the Vote Office and the Printed Paper Office.

The Government have accepted the ombudsman's recommendation to review the time taken to wind up a final salary pension scheme. I have also placed today in the Libraries a report, Speeding Up Winding Up of Occupational Pension Schemes, setting out our belief that it is reasonable to expect a scheme, in the normal course of events, to complete the key activities of winding up in two years; and containing proposals for a series of measures—legislative, regulatory and administrative—to help schemes achieve this target.