DWP publishes official response rejected ombudsman

Ministers accused of ‘challenging parliament’

Ministers accused of ‘challenging parliament’

Ministers have been accused of “appalling arrogance” after refusing to compensate thousands of workers who lost their pensions because of misleading official advice.

The claims come as the Department for Work and Pensions (DWP) today formally rejected the ombudsman’s ruling that 85,000 people lost their pensions in part because of government maladministration.

It is the first time the department or its predecessors have rejected Ann Abraham’s recommendations since her position as parliamentary watchdog was created in 1967, and the DWP insisted it was a decision that had “not been taken lightly”.

However, opposition MPs reacted with outrage at the announcement, with shadow work and pensions secretary Philip Hammond insisting it was a “direct challenge to the authority of parliament”.

In a report published in March, the ombudsman found the DWP had provided incomplete, inconsistent and misleading official leaflets about the pension schemes, and said this had played a significant part in the workers’ losses.

She also concluded that the government should have launched a review of the safeguards surrounding occupational pensions schemes after concerns were first raised in 2001.

However, today the DWP made clear it accepted no responsibility for the pension losses, nor did it believe it would be right to spend taxpayers’ money on what it estimates would be £15 billion in compensation.

It said its information leaflets were only ever meant to be introductory, and refused even to provide consolatory payments for some of the affected employees.

“We do not agree that the information issued by the government was misleading or inaccurate nor do we think there is a link between this information and the pension losses people have experienced,” said pensions minister James Purnell.

“To assert that individuals should be compensated for all their losses – however they occurred – would effectively mean that the pensions promises of employers were underwritten by the taxpayer. No such taxpayer guarantee ever existed.”

The DWP has accepted the call for a review of how long it takes to wind up an occupational salary scheme, and in “sympathy” for those who lost their pensions has extended financial assistance to help about 40,000 people in a similar position.

But Mr Hammond warned that only the ombudsman could rule on maladministration, and in challenging this decision the government was challenging the authority of parliament, adding that the estimated compensation costs of £15 billion were “massively exaggerated”.

He accepted the government could not “write a blank cheque”, but suggested an immediate audit of all the pension funds’ unclaimed assets to assess whether they could be used to help those people who lost money.

Liberal Democrat pensions spokesman David Laws added: “The government is showing the most appalling arrogance in ignoring the financial hardship of thousands of people who saved in an occupational pension.

“There seems little point in having a parliamentary ombudsman if the government slams a report such as this and disregards its recommendations simply because it raises difficult questions.”