The independent action group for current and ex Equitable Life policyholders, funded by contributions.

Equitable Members Action Group

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK

Media Stories: 25/02/2007 - Observer blames Brown for OP stonewalling.

They did the right thing - now it's your turn, Gordon

In an open letter, Jill Insley calls on Brown to make good the government's failure to protect pensioners

Jill Insley, Cash section editor

Sunday February 25, 2007, The Observer


Dear Chancellor,

I am sure you are aware of the situation facing 125,000 employees and pensioners who have lost their pensions through no fault of their own. They have contributed for up to 40 years to pension schemes run by their employers, but unfortunately those schemes closed without having sufficient money to honour the pensions they were due to pay.

Even more unfortunately, they closed before the government got around to setting up the first compensation scheme - the Pension Protection Fund (PPF) - to pay out a decent amount of income to such victims. These people are therefore not eligible to claim from the PPF.

They are not rich people who can afford to sustain a financial loss. They are steelworkers, shoemakers, factory workers. Mr Waugh, 67, thought he would receive £7,500 a year, but when he came to retire in September 2004 he discovered that the gross amount was £2,900. He has had to carry on working to make up the difference - taking on jobs like driving heavy goods vehicles and canvassing door to door.

These people were trying to do the right thing, the thing that this government wants us all to do - save for our own retirement. Under European law, the UK government should have put rigorous safeguards in place to make sure they money saved was safe. The European Court of Justice has determined that this did not happen.

You might also expect that the government could be trusted to provide accurate information about the risks involved in contributing to such pension schemes. But the Parliamentary Ombudsman and now a High Court judge have both ruled that leaflets published by the government were 'sometimes inaccurate, often incomplete, largely inconsistent and therefore potentially misleading'.

In a judicial review judgment published last week, the High Court said the government should reconsider its decision not to fully compensate these people. And yet still your government is delaying. Pensions Secretary John Hutton has told the House of Commons that the government has been given leave to appeal this judgment, and is considering the grounds on which it will do this.

Hutton also pointed out that not everyone can prove they have suffered financial loss because they read the government's misleading pension leaflets.

But back in 2000 when the government sorted out another pensions mess, this time involving Serps, everyone was compensated because sorting out who was misled (again by government misinformation) was deemed too difficult. Alistair Darling, the then Pensions Secretary, said: 'When someone loses out because they were given the wrong information by a department, they are entitled to expect the government to put it right... Political responsibility must lie with the government in office at the time. I accept responsibility for anything that happens during the term of this Labour government. However, I also accept responsibility for putting the situation right.'

If only the current Pensions Secretary could take the same stance. But everyone I have spoken to in the course of reporting this story has said the same thing: that John Hutton has no real power to decide to compensate. That the real obstacle is you.

The court cases that will determine whether these people - many of whom are probably Labour voters - get compensation will take months, if not years, to come to fruition. Thousands of those affected are in their sixties, and already drawing their state pensions.

Please do what everyone who has supported and voted for a Labour government over the last 10 years would expect from you. Compensate these people now. Don't make them wait any longer.

Yours sincerely,

Jill Insley
Cash Editor

Why Brown has been such a let-down on pensions

Ruth Sunderland
Sunday February 25, 2007
The Observer


When Gordon Brown looks back over his decade as Chancellor, he will be able to congratulate himself on 10 years of growth and stability. But when it comes to pensions, he has little reason to be proud.

As my colleague Jill Insley says in her open letter to Brown (Cash), he has let down 125,000 people who lost their retirement savings when their firms went bust, having been misled by government propaganda into thinking their schemes were safe. The government, which resisted paying compensation despite a finding of maladministration by Parliamentary Ombudsman Ann Abraham, is still stalling even after last week's High Court ruling.

The Treasury has also stonewalled pleas for help from victims of the Equitable Life scandal, even though government regulators failed to act on warning signs. The Ombudsman's report into that disaster has been delayed until May, after she found that important evidence had not been disclosed.

In 1989, referring to the Barlow Clowes scandal, Brown asked why 'we have to rely on the Parliamentary Ombudsman' to confirm the then Tory government's 'mismanagement, maladministration and incompetence'. Well, pot and kettle.

The shoddy treatment of the pension wind-up and Equitable victims is part of a wider failure.

One might think that securing decent pensions would be a priority for Labour. True, we have the new Pensions Act, bringing a lifeboat for people whose funds go into wind-up. A pensions regulator has been created, to protect members when firms are taken over. These are steps in the right direction but they come too late.

The Brown years have seen scores of firms taken over by overseas companies and private equity - and caring about pensioners is not high on the agenda of either group.

Ros Altmann, a former adviser to Number 10 and now a campaigner on behalf of dispossessed pensioners, says many schemes in wind-up are ones where foreign or private equity owners 'jettisoned the fund'. This should no longer be possible, but bidders are bound to try.

Brown backed Lord Turner's report into pensions, which led to the idea of the National Pensions Savings Scheme, aimed at encouraging modest earners to set money aside. But those who do so may find themselves penalised by the loss of means-tested benefits and credits.

And let's not forget that the Chancellor has stripped funds of more than £5bn a year in dividend tax relief, hastening the demise of the final salary scheme and contributing to the collective £30bn deficit weighing on FTSE 100 companies.

Lack of faith in pensions has fuelled the property boom, with people betting on bricks and mortar to finance their future. That has left millions exposed to a housing downturn. It has also disenfranchised many would-be first-time buyers, who are flexing their credit cards because a meaningful financial stake in the future is out of reach.

Back in 1997, Brown had a golden opportunity to restore confidence in pensions, not least by increasing basic state payments to a decent level. Unfortunately, he blew it.