“I recommend that the Government should consider whether it should make arrangements for the restoration of the core pension and non-core benefits promised to all those whom I have identified above are fully covered by my recommendations – by whichever means is most appropriate, including, if necessary, by payment from public funds, to replace the full amount lost by those individuals.”
“[47] Ms Rose submits that unless subsequently found by a court to be flawed in law or Wednesbury unreasonable, a finding by the Ombudsman that maladministration has occurred and has caused injustice is binding on the public authority against which it is made, either (a) absolutely, or (b) unless it can be objectively shown to be flawed or unreasonable. Mr Sales, for his part, submits that the Defendant is entitled to reject the Ombudsman’s findings on the basis of a bona fide difference of view, and that unless the rejection is itself flawed in law or Wednesbury unreasonable judicial review should not be granted.”
“5(1) Subject to the provisions of this section, the Commissioner may investigate any action taken by or on behalf of a government department or other authority to which this Act applies, being action taken in the exercise of administrative functions of that department or authority, in any case where – (a) a written complaint is duly made to a member of the House of Commons by a member of the public who claims to have sustained injustice in consequence of maladministration in connection with the actions so taken; and (b) the complaint is referred to the Commissioner, with the consent of the person who made it, by a member of that House with a request to conduct an investigation thereon.”
“10(1) In any case where the Commissioner conducts an investigation under the Act or decides not to conduct such an investigation, he shall send to the member of the House of Commons by whom the request for investigation was made (or if he is no longer a member of that House, to such member of that House as the Commissioner thinks appropriate) a report of the results of the investigation or, as the case may be, a statement of his reasons for not conducting an investigation. (2) In any case where the Commissioner conducts an investigation under this Act he shall also send a report of the results of the investigation to the principal officer of the department or authority concerned and to any other person who is alleged in the relevant complaint to have taken or authorised the action complained of. (2A) . . . (3) If, after conducting an investigation under section 5(1) of this Act, it appears to the Commissioner that injustice has been caused to the person aggrieved in consequence of maladministration and that the injustice has not been, or will not be, remedied, he may, if he thinks fit, lay before each House of Parliament a special report upon the case.”
“New minimum funding requirement for salary related schemes The Pensions Act introduces a new rule aimed at making sure that salary related schemes have enough money in them to meet the pension rights of their members. If the money in the scheme is less than this minimum level, the employer will need to put in more money within time limits. The minimum funding requirement is intended to make surethat pensions are protected whatever happens to the employer. If the pension scheme has to wind up, there should be enough assets for pensions in payment to continue, and to provide all younger members with a cash value of their pension rights which can be transferred to another occupational pension scheme or to a personal pension.”
“[62] . . . PEC 3, especially page 15, gives the clear impression that following the enactment of the new law scheme members can be reassured that their pensions are safe whatever happens. I have no doubt that this is what it was designed to do. I agree with the Ombudsman that it was inaccurate and misleading.”
“ . . . to require schemes to have a level of assets which should as a minimum be sufficient, if the scheme were to wind up, to enable it to pay in respect of each non-pensioner member a sum which if invested in an alternative appropriate pension vehicle could reasonably be expected to generate a pension benefit at least equivalent to that which the scheme would otherwise have paid in respect of rights accrued up to that point in time”
“By reasonable expectation we mean that there should be at least an even chance.”
“[63] . . . There is no mention of this 50% chance in the PEC3. It is right to say that the ‘even chance’ policy is not contained in the statute, and that the Regulations with the phrase ‘reasonably likely’ followed in 1996; but a description of the intended effect or aim of the MFR as being to make ‘sure’ that members received the pensions due to them, in an official publication by the same Department that devised the policy, was plainly inaccurate and misleading. It was not even the intended effect, still less the actual effect, of the MFR.”
“[65] It is not an answer to this point, in scrutinising a general publication directed to lay people, to say that everyone knows that there is no certainty in life; that the value of shares may go down as well as up; and that if your employer goes out of business you are likely to lose your job. A member of the general public between 1995 and 2005 could indeed be assumed to have known these facts of life without being told them in an official publication; but not that if his employers went out of business just before he reached retirement age he might get no occupational pension at all, despite the contributions he had made from his earnings over many years, and despite the existence of people called ‘trustees’ who he thought were there to protect his interests.”
“[70] If the First Finding had been limited to the causation of injustice to any scheme member who had read the offending leaflets, or who relied on advice from colleagues or others who in turn relied on the leaflets, it would not be open to challenge. But I cannot follow the logic of the Ombudsman’s finding that everyone who between 1995 and 2005 suffered losses on the winding up of their pension scheme was the victim of injustice in consequence of maladministration, whether or not official misinformation had anything to do with it and whether or not there were any remedial steps open to them. I therefore conclude that even on the Claimant's case in law (ie that the Ombudsman's findings bind the Defendant subject to the exceptions identified in Danaei) this finding is logically flawed and in that sense unreasonable. . . . ”
“[71] On5 September 2001 the Faculty and Institute of Actuaries wrote to the DWP recommending a reduction in the dividend yield figure for the equity market value adjustment factor used in MFR valuations from 3.25% to 3%, and providing reasons for that recommendation. The profession had indicated in previous communications with the DWP that it was minded to make this recommendation. [72] The DWP asked the Government Actuary’s Department (‘GAD’) to consider and give an opinion on the recommendation. GAD responded on25 September 2001 endorsing the profession's view without qualification. [74] The DWP then considered whether there were any overriding policy reasons why it should not accept the recommendation; and, in particular, whether the recommended change was sufficiently straightforward to allow its implementation before the MFR was expected to be replaced. It concluded that the proposed change could be implemented quickly and without due costs to pension schemes. The change was therefore approved and took effect from7 March 2002 .”
“5.148 Regardless of what professional advice DWP had received, as this decision affected the funding of many private sector final salary pension schemes and as it was related to the security of the pension rights of many thousands of people, it seems to me that DWP should have done more to satisfy itself that it was right to implement this recommendation. 5.149 Did all of the above constitute maladministration? I consider that this decision was taken with maladministration as there is insufficient documentary evidence that explains the rationale for the decision – and as I have doubts about the reliance of DWP on professional advice which seems to me not to have been sufficient in itself to enable DWP to come to a decision that took account of all relevant considerations and which ignored irrelevant ones.”
“In the Department’s view it would have been far more vulnerable to justified criticism if it had substituted an alternative judgment in the face of clear and consistent advice from the actuarial profession and from the Government Actuary’s Department without good reason . . .”
“[79] . . . The Department had a clear recommendation from the leading professional body and the concurrence of its own specialist adviser, the GAD. The Ombudsman was in effect expecting the Secretary of State, who is not an actuary, to keep a watchdog (the GAD) and then bark himself. The fact that additional evidence might have been sought in support of the actuarial profession’s considered view is not equivalent to maladministration. Indeed, the Government Actuary, in an observation quoted in the DWP's Response document of July 2006, has commented that the evidence based for the 2002 decision was ‘extremely strong and much stronger than for many (probably most) of the decisions that have to be taken by Government’. While I am conscious of the substantial research and thought which lies behind the Ombudsman's conclusion on this issue, I decline to quash the Department’s rejection of the Third Finding. If there had been any disagreement between the Faculty and the GAD, or any qualification in the endorsement given by the GAD, the position would have been quite different.”
“[85] . . . If [that question] is reconsidered on the basis that maladministration occurred, but that causation in individual cases has not so far been established, the result may be the same, but will not necessarily be the same. I therefore quash the Secretary of State's rejection of the First Recommendation and direct that it be reconsidered in the light of the Ombudsman's First Finding of maladministration and of this judgment”
“[88] It is submitted that an entitlement under an occupational scheme is a ‘possession’, and that the Government owed all scheme members a positive duty to take reasonable and appropriate steps to protect them from loss of those ‘possessions’. Ms Rose argues that this duty arose because the DWP had created a risk to such pensions, or at least had special knowledge of it; assumed responsibility for providing impartial information; encouraged people to join and remain in such schemes; and created a legitimate expectation of full recovery in the event of winding-up. By publishing information that was sometimes inaccurate and misleading as to risk, and by failing to warn properly of the risk, the Government failed to comply with that positive duty. Accordingly they are obliged to provide proportionate compensation. . . .”
“[90] . . . [Even] if there can be a free-standing A1P1 claim based on legitimate expectation, which is itself contentious, it is difficult to see that the legitimate expectation could be one of full reimbursement for all losses sustained, given the difficulties of causation some of which have featured earlier in this judgment. Finally and similarly, though only as regards the first three Claimants: even if a breach of A1P1 had been proved, the Secretary of State contends that the [Financial Assistance Scheme], in particular as recently extended, provides a proportionate response as a matter of human rights law, given the wide margin of appreciation which the Strasbourg jurisprudence gives to the judgment of member states’ governments on socio-economic issues. ”
“The Secretary of State does not appeal against the learned Judge’s findings in relation to the First Recommendation. Notwithstanding the present appeal, the Secretary of State has reconsidered the First Recommendation on the basis ordered by the learned judge (ie on the basis of the maladministration identified in the First Finding), as a result of which substantial additional financial assistance has been provided to scheme members who have suffered losses. . . .”
“4 . . . In Britain, Parliament is the place for ventilating the grievances of the citizen – by history, tradition and past and present practice. It is one of the functions of the elected Member of Parliament to try to secure that his constituents do not suffer injustice at the hand of the Government. The procedures of Parliamentary Questions, Adjournment Debates and Debates on Supply have developed for this purpose under the British pattern of Parliamentary government; and members are continually taking up constituents’ complaints in correspondence with Ministers, and bringing citizens’ grievances, great or small, to Parliament, where Ministers individually and Her Majesty’s Government collectively are accountable. We do not want to create any new institution which would erode the functions of Members of Parliament in this respect, nor to replace remedies which the British Constitution already provides. Our proposal is to develop these remedies still further. We shall give Members of Parliament a better instrument which they can use to protect the citizen, namely, the services of a Parliamentary Commissioner for Administration.”
“6 The Commissioner will act only at the instance of a Member of the House of Commons, as the elected representative body in Parliament, and on a complaint of personal injustice suffered by the complainant. It will be for the Member to decide whether the complaint appears to be one appropriate for reference to the Commission.”
“11 The Commissioner will be concerned with faults in administration. It will not be for him to criticise policy, or to examine a decision on the exercise of discretionary powers, unless it appears to him that the decision has been affected by a fault in administration. If he finds nothing wrong, he will inform the Member of Parliament who has approached him. If he finds that there is justifiable cause for complaint and the Department responds to his invitation to put it right, he will inform the Member. So far as the Commissioner is concerned, this will be an end of the matter, save for a possible reference to the case in his annual report to Parliament. If the Department does not act to the Commissioner’s satisfaction, it will be open to him to report his conclusion to Parliament ad hoc. 12 It will be for Parliament to decide what arrangements to make to receive and act upon reports from the Commissioner. This will not be a matter for legislation. It may well be found convenient to establish a Select Committee to take these reports in the first instance. This Committee would have the usual powers of a Select Committee to summon witnesses (including Ministers) and to take evidence and report to Parliament. 13 It will be for Parliament, with the help of this Committee (if one is appointed), to consider what action should be taken on the reports of the Commissioner – whether the annual report or reports ad hoc. . . .”
“16 . . . First, that this new institution should serve to develop and reinforce our existing constitutional arrangements for the protection of the individual. Secondly, that the scope of the scheme must be made as clear as possible, so that everybody may know as plainly as may be what cases the Commissioner will be able to take up and what their rights and obligations will be in relation to his inquiries.”
“If he is prepared to take the consequences, and defend his position in Parliament, in the last resort a Minister who genuinely believes that he and his department have been unfairly criticised by the Commissioner, clearly has the right to say so, . . . ”
“31(1) If in the opinion of the Local Commissioner, as set out in the report, injustice has been caused to the person aggrieved in consequence of maladministration, the report should be laid before the authority concerned, and it shall be the duty of that authority to consider the report, and to notify the Local Commissioner of the action which the authority has taken, or propose to take. (2) If the Local Commissioner:- (a) does not receive any such notification within a reasonable time; or (b) is not satisfied with the action which the authority concerned has taken; (c) does not within a reasonable time receive confirmation from the authority concerned that they have taken action, as proposed, to the satisfaction of the Local Commissioner, he shall make a further report setting out those facts; and section 30 above shall apply, with any necessary modifications, to that further report.”
“It is true that the council and its officials have been publicly criticized in a manner which I consider to have been unauthorised. But this is a free country, and even if the council has no remedy in the courts, there is nothing to prevent them from responding to the report with equal publicity disputing the local commissioner’s findings and quoting if they so wish the legal advice which they have received. . . .”
“ . . . Such an action would wholly undermine the system of ombudsman’s reports and would, in effect, provide for an appeal to the media against his findings. The Parliamentary intention was that reports by ombudsmen should be loyally accepted by the local authorities concerned. This is clear from section 30(4) and (5) which require the local authority to make the local report available for inspection by the public and to advertise this fact, from section 31(1), which requires the local authority to notify the ombudsman of the action which it has taken and proposes to take in the light of this report and from section 31(2), which entitles the ombudsman to make a further report if the local authority's response is not satisfactory. Whilst I am very far from encouraging councils to seek judicial review of an ombudsman’s report, which, bearing in mind the nature of his office and duties and the qualifications of those who hold that office, is inherently unlikely to succeed, in the absence of a successful application for judicial review and the giving of relief by the court, local authorities should not dispute an ombudsman’s report and should carry out their statutory duties in relation to it.”
“[53] . . . an elected local authority such as Birmingham City Council, in the absence of a successful application for judicial review, must loyally accept the findings of an LGO (Eastleigh); whereas a quango such as the British Potato Council is free simply to disagree with any adverse findings of the Ombudsman unless its disagreement is itself flawed in law or Wednesbury unreasonable, which would be for the complainant to establish by an application for judicial review.”
“Except for some exclusions which are explained later in this Paper, the field for the Commissioner will be the whole range of relationships between the private person and the central Government”
“It . . . behoves the courts to be ever sensitive to the paramount need to avoid trespassing upon the province of Parliament or, so far as this can be avoided, even appearing to do so.”
“The list [of the bodies which are to be subject to investigation by the Commissioner] will need to be amended from time to time as the structure of the government machinery itself is changed”
“Non-Departmental Public Bodies” (October 1984). Paragraph 16 of that Report is of interest in the present context: “16 The question of how the PCA’s judgements could be enforced over non-departmental bodies was one that exercised the minds of the PCA [Parliamentary Commissioner for Administration] and of the CSD [Civil Service Department]. It is a desirable feature of any system for reviewing administration that there be some practical sanction where maladministration is discovered. The difference in the proportion of justified grievances ultimately unredressed after investigation by the PCA and CLA [Commission for Local Administration] respectively is proof enough of this. The sanction behind the PCA’s judgments is Parliamentary pressure, and this is most easily exercised through a responsible Minister. If a body whose day-to-day actions were not subject to ministerial control were to refuse the redress indicated by the PCA, the Minister might have no recourse other than to dismiss the Chairman, a remedy which the PCA rightly described as ‘a sledgehammer’. The CSD suggested that Ministers might be given power to order compliance with PCA judgements but felt that that would alter the characteristic relationship between Government and non-departmental body. We see no need for such provision. The experience of the Health Service Commissioner suggests that compliance can be achieved without any direct sanction, the authority of the Commissioner and the displeasure of Parliament, expressed in the first instance through this Committee, having always proved sufficient to secure the suggested remedy. However, in case anyone should suggest to the contrary it is to be remembered that many of these bodies receive money from public funds and that what Parliament customarily votes it can, if moved thereto, withhold. The new financial procedure, whereby debates are regularly held on the Estimates would offer a suitable Parliamentary opportunity for bringing unredressed maladministration by non-departmental bodies to the attention of the House of Commons.”
“ . . . Although both the judgment below and the arguments before us focused principally upon the scheme of the legislation and whether the highway authority’s approach to its s.278 discretion thwarted the policy and objects of the two Acts here in question - see, for example, Padfield v Minister of Agriculture, Fisheries and Food[1968] AC 997 - I for my part prefer the broader Wednesbury analysis of the case. Indeed, so far from this appeal raising . . . ‘a short point of statutory construction’, I see it rather as raising this simple question: is it reasonable for a highway authority, whose road safety objections have been fully heard and rejected on appeal, then, quite inconsistently with the Inspector’s independent factual judgment on the issue, nevertheless to maintain its own original view? To my mind there can be but one answer to that question: a categoric ‘No’.”
“ . . . the Inspector’s conclusion on that issue, because of its independence and because of the process by which it is arrived at, necessarily becomes the only properly tenable view on the issue of road safety and thus is determinative of the public benefit.”
“ ‘. . . In those circumstances, I accept [counsel’s] submission that no reasonable Highway Authority would, on the sole basis of the arguments as to road safety which had been fully considered and determined in the planning process, refuse to enter into any necessary Section 278 Agreement on the grounds that to do so was not a benefit to the public, thereby preventing the development from proceeding. I have therefore come to the conclusion that the decision of the County Council in this case to refuse to enter into the Section 278 agreement in question is both perverse and unreasonable in the Wednesbury sense. As [counsel] succinctly put it, it cannot be reasonable for the Highway Authority to allow a decision of the Secretary of State to be implemented only if it agrees with that decision.’”
“To my mind it was not: in truth there is here but one issue: who, as between the Secretary of State (or Inspector) on appeal and the highway authority, is to have the last word in deciding a road safety issue of this nature?”
“Essentially . . . the judge found that it was Wednesbury unreasonable for the Secretary of State to have maintained his own original view of the facts in the face of the adjudicator’s contrary views formed upon the respondent's related unsuccessful asylum appeal given that there was no material additional evidence on which the Secretary of State could rely.”
“Was he, however, in the circumstances of this case, then entitled to disagree with them? That is the critical question”
“In the present case . . . the primary fact in question is whether or not the respondent was an adulterer. On an issue such as this it does not seem to me reasonable for the Secretary of State to disagree with the independent adjudicator who has heard all the evidence unless only: 1. the adjudicator’s factual conclusion was itself demonstrably flawed, as irrational or for failing to have regard to material considerations or for having regard to immaterial ones - none of which is suggested here; 2. fresh material has since become available to the Secretary of State such as could have realistically have affected the adjudicator's finding - this too was a matter we considered in Powergen; 3. arguably, if the adjudicator has decided the appeal purely on the documents, or if, despite having heard oral evidence, his findings of fact owe nothing whatever to any assessment of the witnesses.”
“His judgment demonstrates the essential independence of the special adjudicator within the statutory scheme governing applications for asylum without undermining the ultimate responsibility of the Secretary of State for deciding whether to grant an asylum seeker exceptional leave to remain. The desirable objective of an independent scrutiny of decisions in this field would be negated if the Secretary of State were entitled to act merely on his own assertions and reassertions about relevant facts contrary to express findings made at an oral hearing by a special adjudicator who had seen and heard the relevant witnesses. That would approach uncomfortably close to decision making by executive or administrative diktat. If therefore the Secretary of State is to set aside or ignore a finding on a factual issue which has been considered and evaluated at an oral hearing by the special adjudicator he should explain why he has done so, and he should not do so unless the relevant factual conclusion could itself be impugned on Wednesbury principles, or has been reconsidered in the light of further evidence, or is of limited or negligible significance to the ultimate decision for which he is responsible.”
“120 For the avoidance of doubt, the relevant test is not whether a reasonable Secretary of State could himself conclude that failure to disclose risks in official leaflets was [not] maladministrative. Such a test would fail to take into account the fact that Parliament has conferred on the Ombudsman the function of making findings of maladministration and that the decision under review is a decision to reject that conclusion. The question is not whether the defendant himself considers that there was maladministration, but whether in the circumstances his rejection of the Ombudsman’s finding to this effect is based on cogent reasons.”
“The Government wanted to remove any worries people had about the safety of their occupational (company) pension following the Maxwell affair.”
“56(1) Every occupational pension scheme to which this section applies is subject to a requirement (referred to in this Part as ‘the minimum funding requirement’) that the value of the assets of the scheme is not less than the amount of the liabilities of the scheme.”
“56(3) For the purposes of this section and sections 57 to 61, the liabilities and assets to be taken into account, and their amount or value, shall be determined, calculated and verified by a prescribed person and in the prescribed manner.”
“(c) that liabilities in respect of members will be so secured that – (i) the benefits of pensioner members will be equal in value to those under the scheme (ii) the benefits of active members and deferred members will be reasonably likely to be equal in value to those payable in respect of their accrued rights under the scheme;”
“ . . . the intention underlying the MFR (which was clearly expressed by Ministers during the passage of the Pensions Bill) is to require schemes to have a level of assets which should as a minimum be sufficient, if the scheme were to wind up, to enable it to pay in respect of each non-pensioner member a sum which if invested in an alternative appropriate pension vehicle could reasonably be expected to generate a pension benefit at least equivalent to that which the scheme would otherwise have paid in respect of rights accrued up to that point in time. By reasonable expectation we mean that there should be at least an even chance.”
“5.41 . . . No mention was made that the Government intended for non-pensioners that they would only have a ‘reasonable expectation’ that this [the provision of a cash value of their pension rights] would be the case, still less that such an expectation meant only an ‘evenchance’. 5.42 DSS had been given warnings that care had to be taken to ensure that scheme members did not misunderstand the degree of protection that the new legislative framework would provide for their pension rights. They had a responsibility to ensure that there were no significant omissions from any information they chose to publish. 5.43 Given this, I consider that the failure to ensure that the most fundamental aspect of the MFR – the policy intention that the Government would adopt towards what the MFR would actually provide in terms of security for scheme members – was included in the official information given to people ‘to remove any worries’ they might have was highly unsatisfactory. It misled the readers of that leaflet by giving them assurances that were never intended to be met.”
“5.67 I have seen nothing that would make me doubt that the Government’s intention behind the MFR was always that it could only provide a limited degree of security to non-pensioner members – which was apparent from its design . . . 5.68 However this was not properly disclosed to those most affected by such an intention. I consider that the official information given to the public about the degree of security provided by a scheme funded to the MFR level: (i) was, prior to September 2000, misleading, incomplete and inaccurate – in that it gave assurances which were incompatible with the design and purpose of the MFR as prescribed by Government – and with its practical operation. These assurances were that the MFR was designed to ensure that the schemes had sufficient assets to meet their liabilities and that a scheme funded to the MFR level would be able to pay cash transfers of accrued rights to non-pensioners. In addition, no disclosure or even mention was made of risks to accrued rights or of the potential effects of statutory priority orders on wind-up. . . . ”
“all of the leaflets to which the draft report refers carried a general health warning making clear that they were not complete explanations of the law and were for general guidance only. As such they could not be absolutely relied upon; . . .”
“10 We remain firmly of the view that it is reasonable to expect people to obtain more detailed information about the specific pension scheme they were joining (or had joined) rather than relying on brief, general and introductory material such as was issued by the Department. It is unrealistic to maintain – as the report appears to – that individuals had no responsibilities beyond reading the general leaflets issued by the Department. For example nobody could, in our view, have read a leaflet which opens with a phrase saying that it provided ‘a brief summary of the changes’ arising from the 1995 Pensions Act – as the PEC 3 did – and went on to say that ‘more detailed information will be published later’, and have concluded that they had the full picture. The leaflet concerned covered the whole of the provisions of the 1995 pensions Act in 20 pages and the MFR in just four sentences. Nobody could believe that they were being provided with an unqualified and complete understanding of the MFR; that occupational pension schemes were absolutely safe; and that they could, therefore, join (or remain in) one without making further enquiries. . . . .”
“Instead it was intended to ensure that a scheme which was fully (ie 100%) funded on the basis of the MFR should have sufficient assets, in the event of it winding up, to protect fully pensions already in payment (by buying annuities), and to give younger members a cash amount which, if placed in a personal pension would allow them a reasonable expectation – but not a guarantee – of achieving, at retirement, benefits equivalent to those lost”
“36 . . . The . . . more general information which the Government provided in its leaflets was intended only to provide basic information and its limitations were made clear. The Government does not accept the finding that this information was potentially misleading and, thus, maladministrative.”
“[The judge] ought to have held that such a view [disagreeing with the Ombudsman’s finding in relation to PEC 3] was rationally open to the Secretary of State in the light of (a) the very general purpose of the PEC3 leaflet; (ii) the context in which it was published; (iii) the express caveat to which the leaflet was subject; and (iv) its informal and general language”
“The objective of the MFR is that a scheme fully funded according to its requirements would, if the employer became insolvent, protect fully pensions in payment, and provide younger members with a transfer value that would give them a reasonable expectation of replacing scheme benefits if they transferred to another pensions vehicle.”
“5.167 It is clear to me from the evidence I have reviewed about the personal circumstances of all those who have complained to me that they and their families have suffered financial loss, a sense of outrage, and considerable distress, anxiety and uncertainty. 5.168 I am also satisfied that they have suffered injustice through an inability to make informed choices or to take remedial action. . . .”
“5.245 I have found that 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 – was caused by maladministration.”
“5.246 I have also found that the maladministration I have identified was a significant contributory factor in the creation of the financial losses suffered by individuals, along with other systemic factors. . . . ”
“5.246 . . . A further consequence of that maladministration was financial injustice – the distortion of the reality facing scheme members so that they were wholly unaware that their pension rights were dependent on the ongoing security of their employer.”
“Official information had effectively distorted the reality of the position in which scheme members found themselves. As a result, they were wholly unaware that their pension rights were dependent on the ongoing security of the employer sponsoring their scheme”
“53 Crucially, a number of the schemes covered by the report would not have had an MFR valuation before they went into wind-up. In these cases, self-evidently, members, even if properly advised about the limitations of the MFR, could not have taken account of such a valuation. Other schemes, which had a valuation, would have been found to have been underfunded against this test. Even if the members of these schemes had believed that, if their scheme was funded up to the MFR, they were fully protected, they could not have believed this protection applied to their scheme if underfunded. Therefore, any decision they made to join or stay in that scheme in these circumstances could not have been influenced by a belief that their scheme was, in some way, ‘safe’ 54 Where their scheme had been the subject of a MFR valuation and had been found to comply with it, it is clearly more plausible that the scheme’s members might have sought to act differently if they had had a fuller explanation of what safeguards this did, and did not, provide. Even in those circumstances, however, and leaving aside the issue of the responsibility for any such lack of a fuller explanation, it is the Government’s view that any action that could have been taken by members, either individually or collectively, would have been unlikely to have protected a greater part of their accrued rights, much less protected all of them. Indeed many possible actions would have exposed them to potentially greater risks. 55 For example, taking some of the possibilities raised in the Ombudsman’s report, it would have been very difficult to persuade an employer to inject more money into a scheme when that company was itself in serious financial difficulties. In addition it would have been surprising if the employer in such circumstances would have been able to find another company willing to take it over and fund the pension deficit. 56 Where individuals wanted to transfer their money out of their occupational pension scheme and to remain working for the sponsoring employer, their only realistic option would have been to have transferred their share of the fund (which might have been reduced by the scheme) into a personal pension. This would, however, have left them still exposed to the risk of stock market movements and the general economic situation, as well as having to pay management costs and is likely to have deprived them of the employers’ contribution. How much they would have lost or gained from such a transfer would be dependent on the company from which they chose to buy their personal pension and would not have been known until they reached retirement age.”
“7.56 First, while it is true that only approximately one-half of those complainants who responded to my survey can now demonstrate that they had seen the official information that I consider to be deficient, I think that it cannot be forgotten that a considerable time has passed since many of the leaflets were issued and read. Nor is it the case that all of those who cannot now demonstrate it did not see such information in the past. 7.57 I do not consider that it is reasonable to expect all individuals to now provide evidence in the form of copies of leaflets that were read many years ago. Such an expectation does not accord with the approach that my Office has taken in previous similar cases – nor is it one that DWP accepted in those cases.”
“3.141 [My advisers] advise me that the15 June 1998 change reduced the value of the MFR liabilities for members more than ten years away from their MFR pension age by 9.4%. 3.142 I am also advised that the7 March 2002 change to the formula reduced the value of the MFR liabilities for members more than ten years away from their MFR pension age by 7.7%. 3.143 Thus, the effect of the combined changes, compared to the original 1997 basis, was a weakening in the MFR basis of approximately 17% . . .”
“Not only was the decision taken after DWP had regard to the available options, it was taken after full consideration of the advice of the actuarial profession – which was supported by further evidence and statistics to back that advice up”
“The statement made [in paragraph 5.129 of the Report] fails to recognise that GAD had been aware of, and closely involved in, the development of the profession’s thinking on the MFR over many months and so GAD was fully aware of the context and scope of the profession’s work when the Department’s request for advice was put to us in September 2001. Furthermore our e-mail of25 September 2001 was in confirmation of earlier discussions with DWP and so not the only component of our advice. Nor was our advice limited in any way, and particularly not in the way suggested [in paragraph 5.130]. The context of that advice was the overall question of how the strength of the MFR basis might have changed since it was last reviewed. We do not agree that our advice was limited in the way suggested [in paragraph 5.130]. Neither do we agree that we failed to answer the question that DWP had put to us. This is a completely distorted interpretation of the GAD advice, exemplified by the unacceptable description of one paragraph of that advice as being the ‘full advice’. . . . The statement made [in paragraph 5.138] does not recognise that, throughout its involvement in professional affairs, GAD had had access to the detailed work carried out by the Technical Support and research Committee of the Pensions Board of the actuarial profession, the committee that undertook the analysis leading to the profession’s5 September 2001 recommendation. Once again, [paragraph 5.142] does not recognise the context of continuing discussions on the replacement of the MFR, involving the GAD, The Department and the actuarial profession, over the period between September 2001 and January 2002. . . . Moreover . . . the evidence base [for DWP’s decision] was not insufficient since it was based on strong advice from the actuarial profession, which had been developed by a committee containing leading technical experts from most of the major firms of actuaries, and supplemented by GAD as a further independent source of advice. The evidence base for this decision was in fact extremely strong and much stronger than for many (probably most) of the decisions that have to be taken by Government.”
“The Government received a recommendation from the UK actuarial profession (as part of its role in continually monitoring the actuarial basis for the MFR) which was backed by the GAD and acted upon it. . . . The Government Actuary, in commenting to the Ombudsman on this issue . . . , has said that he considers that the evidence for this decision was ‘extremely strong and much stronger than for many (probably most) of the decisions that have to be taken by Government’. The Government . . . would have needed strong grounds to justify not acting on the recommendation. No such grounds were apparent at the time.”
“[78] [The ombudsman] concluded that this decision was taken with maladministration as there was insufficient documentary evidence that explained its rationale. She had doubts (at paragraph 5.149) about the reliance of DWP on professional advice which seemed to her ‘not to have been sufficient in itself to enable DWP to come to a decision that took account of relevant considerations and which ignored irrelevant ones’. She notes in particular that the only documentary proof of advice from GAD on this subject is contained in two sentences of a single email.”