Socialist Worker

Scandal of schemes that go bust

Issue No. 1992

The government was nervously awaiting a report from the parliamentary ombudsman this week over the scandal of collapsed pensions schemes.

It could blame the Department for Work and Pensions for misleading people over pensions—and demand compensation payments of up to £5 billion.

The victims of the process are 85,000 workers who lost their pensions when their employers went bust.

The report by Ann Abraham, which was supposed to come out in July 2005, then October 2005, was eventually to be published on Wednesday of this week.

It was expected to say that the government misled workers by falsely promoting the idea that company pensions were guaranteed.

Even if it calls for a full restoration of lost pensions, ministers may refuse to pay out. Last October Ann Abraham hit out at the government for seemingly “picking and choosing” which of her recommendations it wanted to accept.

The investigation is expected to focus on legislation brought in after the Maxwell pensions scandal, which established the “minimum funding requirement” for company pensions.

This formula was designed to ensure that final salary schemes were safe. But in reality it does not force companies to fully fund their pension schemes.

About 400 company schemes have since collapsed, leaving employees with little or nothing from their pension.

Click here to subscribe to our daily morning email newsletter 'Breakfast in red'

Article information

Sat 18 Mar 2006, 00:00 GMT
Issue No. 1992
Share this article


Mobile users! Don't forget to add Socialist Worker to your home screen.