Compliance February 21, 2007

UK Court Sides with Employees on Failed Pension Payout Debate

February 21, 2007 (PLANSPONSOR.com) - The U.K. High Court has sided with four pensioners over whether the government should have to fully compensate workers whose pension plans have collapsed.
Reported by

The government should not have rejected the finding of ombudsman Ann Abraham (See  UK Government Will not Take Responsibility for Pension Loss ) that it was guilty of wrongdoing in its dealings with the pensioners’ failed plan, the UK court said.

Officials had asserted that they are willing to offer limited compensation to pensioners in failed plans because full reimbursement would have been too costly, according to a news report on the Web site politics.co.uk. The cost of full compensation was estimated at £15 billion while the government of Prime Minister Tony Blair offered £2 billion to be restricted to those within 15 years of retiring.

For his part, Blair maintained that the government cannot afford to commit to standing behind the collapse of every pension plan, while insisting that the current compensation system is working.

The latest court ruling was welcomed by Labor MP Frank Field, whose pension protection bill, which contained measures to give full compensation, was dropped by the government.

“The government will now have to do the right thing by all pensioners who have lost part of their retirement income. But they will get little credit,” Field   predicted, according to the news report.

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