Key findings from the ombudsman's report on the security of final salary occupational pensions.

In November 2004 the ombudsman began an investigation into complaints related to a number of final salary occupational pension schemes which were wound-up without sufficient funds to enable the schemes to meet the 'pensions promise' to all their members.

The complaints were directed against the Department for Work and Pensions, HM Treasury, the former Occupational Pensions Regulatory Authority and the National Insurance Contributions Office of HM Revenue and Customs.

Complainants had said that information provided by DWP, OPRA and other government bodies was misleading in that it did not explain the security of the pension rights of members of final salary occupational schemes accurately, completely, clearly and consistently.

There were also complaints that the DWP did not take action to warn scheme members of the risks to their pensions when the actuarial profession recommended in May 2000 that such warnings should be given.

It was also alleged that the government twice weakened the security provided by the statutory 'minimum funding requirement' for pension schemes without regard to the impact that this would have on the security of pensions.

And it was said that delays and error by NICO had led to the process of winding-up schemes taking much longer than was necessary.

Part of the criticism relates to decisions from late 1995 when the Conservatives were in power, although major decisions were also taken by Labour.

Maladministration

The ombudsman said that official information on the issues was inaccurate, omitted to mention highly significant factors, was unclear and inconsistent.

Officials in the DWP, by then under a Labour administration, failed to consider the effects of this inaccurate information when they were informed again in 2000 by the actuarial profession that scheme members had no idea of the risks to their pensions.

That prompted the ombudsman to uphold three findings of maladministration in relation to "inaccurate, often incomplete, largely inconsistent and therefore potentially misleading" information.

The response by the DWP to the actuarial profession's warnings "had no regard to the role that its own deficient information had played in creating the position in which scheme members were unaware of risk".

And a 2002 DWP decision to approve a change to the minimum funding requirement was based on "insufficient documentary evidence".

Recommendations

The ombudsman said the government should consider whether it should make arrangements for the restoration of the core pension and non-core benefits to those scheme members covered by her recommendations, including payments to replace the full amount lost.

She also suggested that consolatory payments should be paid as recognition of the "outrage, distress, inconvenience and uncertainty" caused to victims.

The government should also offer an apology for distress caused by maladministration

Compensation could also be offered to those whose scheme began winding-up between April 1, 2004 and March 31, 2005 and who are thus not fully covered by the recommendations.

And a review of how to improve the time taken to wind up final salary schemes was also urged.

All but the last of these recommendations were rejected by the government.

As a result the ombudsman has told parliament that she is not satisfied with the ministerial response.

The Commons public administration committee has indicated it will now launch an investigation into the matter.