High Court to rule in pensions dispute

| February 20, 2007
High Court to rule in pensions dispute

A ruling is due Wednesday from the High Court in a case that could affect as many as 85,000 people who lost at least part of their company pensions when 400 pension schemes closed down between 1997 and 2005. The issue is whether the government violated the law when it rejected last year’s report from the Parliamentary Ombudsman that said the government was guilty of maladministration because the information it provided to pensioners falsely led them to believe that their pensions were secure when, in fact, they were not. Since then, the government has refused on a number of occasions to agree to provide compensations for pensions lost by individuals who relied on the information the government provided.

The government has argued that it bears no fault in the losses because there is no clear connection between those losses and the information it provided. It has also said that it would simply be too expensive to pay full compensation, amounting to around £15 billion over 60 years. In January the European Court of Justice called the UK government’s pension plan inadequate, but did not rule on compensation and instead referred the case back to the High Court. On the other hand, lawyers for those bringing the case have argued that the ruling of the Ombudsman are binding and that the government is legally required to restore the lost pensions from public money.

Because the individuals involved suffered losses before the Pension Protection Fund was put in place, they are only eligible to make claims against the more limited Financial Assistance Scheme. So far the FAS has only paid the claims of 871 individuals and has a backlog of six months worth of claims still being considered.


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