Pension losses result in legal action

A group of workers who lost their pensions when their employers went out of business will say in the high court in London Wednesday that the government has blocked payments due them. Fewer than 900 of the 125,000 affected workers have received help through the Financial Assistance Scheme which was approved by the government a year and a half ago. The court case comes after a decision by the Department for Work and Pensions that rejected both finding that the scheme had been badly administered and a recommendation for compensation recommended by parliamentary ombudsman Ann Abraham.

The workers bringing the case are members of the Pensions Action Group. They claim that they suffered losses because they relied on information that was misleading and because the government did not protect them properly. The European court of justice ruled in the case that the government’s protection was “inadequate” but sent the decision on compensation back to the UK courts. A ruling favoring the workers by the high court could result in the government having to pay out hundreds of millions of pounds to the claimants.

Work and pensions minister James Purnell has admitted that the processing of claims submitted to the Financial Assistance Scheme are taking six months to process and that only 871 claimants have received help from the scheme so far.

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