Pensions

Oral Answers to Questions — Work and Pensions – in the House of Commons at 2:30 pm on 12 March 2007.

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Photo of Ann Winterton Ann Winterton Conservative, Congleton 2:30, 12 March 2007

What support his Department is giving to those who lost occupational pensions prior to the introduction of the Pension Protection Fund.

Photo of James Purnell James Purnell Minister of State (Pensions Reform), Department for Work and Pensions

The Pensions Act 2004 puts in place a range of measures to provide support, advice and protection to schemes and scheme members. In particular, the financial assistance scheme provides support to members of defined benefit occupational pension schemes that started to wind up, underfunded, between 1 January 1997 and 5 April 2005.

Photo of Ann Winterton Ann Winterton Conservative, Congleton

The High Court recently ruled that the Government were completely wrong to reject the parliamentary ombudsman's report on failed pension schemes. The Secretary of State subsequently told the House that the Government would re-examine the report. What can the Minister tell the House today about that? What can the Government devise to assist scheme members who have been so hard hit? Will he take a leaf from the book of Mr. Field and perhaps consider using unclaimed bank and building society assets for compensation?

Photo of James Purnell James Purnell Minister of State (Pensions Reform), Department for Work and Pensions

We will look at suggestions from hon. Members of all parties, as my right hon. Friend the Secretary of State made clear in his statement on 22 February. He also said that we were examining the financial assistance scheme in the light of the European Court of Justice case. We have made a commitment to pay the claimants' costs in the appeal to ensure that they are not disadvantaged. We have said that we will come back to the House as soon as possible—certainly before the Pensions Bill completes its passage.

I want to correct one point that the hon. Lady made. The court did not find against the Government on all aspects. It found against the Government on the 1996 leaflet that was issued and upheld the Government's case on causality and the operation of the minimum funding requirement.

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The minister is not being strictly accurate in his correction. Mr Justice Bean was not able to find that the Government leaflets caused the losses in all 125,000 cases where pension rights were lost on scheme wind-up. But that is by no means the same as saying that there is no causal link at all, which is the Government position. What the judge was saying that there may well be a link in some (perhaps most) cases, but that they would have to be considered individually. So he did not rule out the possibility of...

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Photo of George Young George Young Chair, Standards and Privileges Committee, Chair, Standards and Privileges Committee

Does the Minister recall an uncomfortable debate before Christmas, when he was almost isolated in the House in rejecting the recommendations of the ombudsman and the Public Administration Committee? Will he confirm that the Government do not wish to have a confrontation with Parliament on the matter and that, against that background, he does not rule out giving financial assistance to the group of pensioners whom my hon. Friend Ann Winterton mentioned?

Photo of James Purnell James Purnell Minister of State (Pensions Reform), Department for Work and Pensions

The question has always been one of proportionality. We introduced the financial assistance scheme and extended it to more than £2 billion. We recognise that people in these circumstances face the real personal tragedy of losing their pensions. We have always said that the financial assistance scheme is there for exactly that reason—to reflect that loss of pension. The question has always been what we can justifiably ask the taxpayer to pay. In that debate, I made the case on the issue of causality that we did not agree with the ombudsman that we were responsible for the whole of the losses and should therefore make good the whole of the losses—and the court actually upheld that part of our argument.

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