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BUSINESS NEWS: Ministers reject pensions compensation call. By Dan Martin

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7th Jun 2006
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The government will not pay compensation to 85,000 people who lost money when their pension scheme went bust, it has announced today.

Issuing its official response to parliamentary ombudsman Ann Abraham's call for those affected to be recompensed, the Department for Work and Pensions (DWP) said it did not believe the government was responsible for the losses.

Earlier this year, Abraham ruled that the government was guilty of maladministration and should take part responsibility for employees who lost money between 1997 and 2005 when their pension scheme collapsed or were closed by their employers.

One major error, Abraham said, was inaccurate and potentially misleading information included in official information leaflets and parliamentary statements about the security of occupational pension schemes.

The ombudsman also claimed ministers acted wrongly in 2002 by adjusting the the Minimum Funding Requirement (MFR), an important method of valuing the pension schemes' solvency.

"[The government] does not believe that the report makes the case that the government is responsible for the losses incurred."

Department for Work and Pensions

But the DWP report said: "It [the government] does not believe that the report makes the case that the government is responsible for the losses incurred. Given that the government could not agree the findings of maladministration, it considered that any delay in responding to the recommendations could only have served to raise false hopes amongst the complainants concerned."

Referring to information leaflets, the DWP denied that they were misleading claiming they were only "intended to provide basic information and its limitations were made clear".

It also denied that the MFR was intended to require schemes to hold sufficient assets to ensure that all members benefits could be fully secure should the scheme close.

In conclusion, the DWP said: "It was the fundamental responsibility of trustees and employers to provide detailed information on their schemes to their scheme members. These were not the government's pension schemes. Their trustees were not the government's trustees."

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