Wednesday, March 15, 2006

Pensions: They Would Say That

As we are only too well aware, this government has pretty well destroyed Britain's once mighty occupational pensions system. Millions of us can now look forward to much poorer retirements- a particularly long-lasting feature of New Labour's horrific legacy.

Part of the destruction of course was Gordo's outrageous £6bn pa tax grab from company dividends. But that at least was to be expected from any high tax and spend Labour government. The voters voted them in and somebody was always going to have to pay.

What is much less forgivable is the crass incompetence that has turned crisis into disaster. We've blogged before about how, in piling more and more regulation and funding risk onto employers, successive governments simply hastened the employers' withdrawal from the whole shebang: well over three-quarters of final salary pension schemes are now closed to new members.

And we've now had confirmation that the advice leaflets the government handed out to pension fund members while all this was going on were so misleading as to be actionable...that is, if they'd been produced by an Independent Financial Advisor rather than the government.

The Parliamentary Ombudsman has investigated the government's advice, and found yet another catalogue of incompetence:
  • "Official information - about the security that members of final salary occupational pension schemes- was sometimes inaccurate, often incomplete, largely inconsistent and therefore potentially misleading, which was contrary to the Department for Work and Pensions’ own standards and also to principles of good administration
  • The DWP appeared to have relied on professional advice which could not be sufficient in itself to enable the Department to come to a decision
  • Maladministration caused injustice in the forms of a sense of outrage, lost opportunities to make informed choices or to take remedial action, and distress, anxiety and uncertainty...and was a significant contributory factor in the creation of the financial losses suffered by individuals."

What's the government doing to make amends? DWP Secretary John Hutton immediately rubbished the report: "I don't think there is any evidence that the leaflets were inaccurate or incomplete in the way that the parliamentary ombudsman has indicated." Well, as we've just been reminded, he would say that wouldn't he.

And Tony himself says about possible compensation: "we simply can't do it" as it would set "enormous precedents".

He's probably right. We might all start asking for our money back.

Once again, the big conclusion is that government advice is never to be trusted.

Should you get your baby vaccinated? Don't trust the government- Google it.

Should you eat beef? Don't trust the government- Google it.

Should you invest in a stakeholder pension? Possibly yes...but who'd trust the government?

PS Mandy's 61 now, so she'll be drawing her state pension. I wonder what her occupational pension arrangements are.

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