Letter from Saga
The following letter was sent from Saga director Tim Bull to Pensions Minster James Purnell.
The Pensions Action Group thank Saga for their support.
Dear Mr Purnell
Compensation for members of occupational pension schemes wound up between 1st January 1997 and 5th April 2005
As you will be aware, Saga is the UK’s leading organisation specialising in providing services to people aged 50 and over. We have around 4 million customers of our financial services and travel businesses, readers of the Saga Magazine and listeners to our regional radio stations.
Saga Magazine is read by over a million people every month. In our August edition, the regular, and very popular, financial section included an article about the estimated 125,000 people who lost much or all of their accrued pensions rights as a result of occupational schemes being wound up. We always receive feedback on articles from readers but in this case we were taken aback by the quantity and quality of letters and e-mails received. Some correspondents have been personally affected, and the disappointment and distress at the loss of pensions built up over many years comes through very clearly. Many others have not suffered themselves, but make the case that justice is not being done for the victims.
Saga has no alternative but to support the very strong opinions voiced by our readers.
Our correspondents, in a great many cases, have been members of and contributors to schemes for many years. They have done what successive Governments have desired and actively encouraged : planned and saved for their own retirement. The losses that they have suffered, or will suffer, have not been due to profligacy or poor choices, but systemic failures in a system which they were assured, post-Maxwell, was now secure.
In such circumstances, it seems to us, to our readers, and the vast body of public opinion wherever canvassed, that the country should “do the right thing” by compensating scheme members for these losses. Issues of blame or liability are frankly irrelevant; the phrase we are hearing time and time again is “natural justice”. In total, the sums involved, though not trivial, are eminently affordable, will spread over 60 years, and will be offset to a large degree by tax payments and savings on benefits or pensions credits that will otherwise be claimed.
We further believe that this case has relevance well beyond the 125,000 who have already lost out. The point is succinctly put by one of our readers :
After 25 years in a final salary scheme … it was wound up. I have been informed I can expect 10% of my entitlement – this is an outrageous injustice. How can anyone have confidence to save in a pension.
Recent reports suggest that 2 out of 5 workers do not save for their pensions. The Turner Report demonstrated the need to change this trend, going as far as to call for a universal occupational scheme. We support Lord Turner’s report and are pleased that Government’s White Paper is taking up many of his recommendations. However, the success of pension reform will be undermined as long as there are cases like this, examples that persuade many ordinary working people that saving for retirement is not worth the cost, or the risk.
Saga welcomed the Financial Assistance Scheme, but we believe that it must now be replaced or substantially amended. There can be no justification for the limited proportion of accrued entitlements to be reimbursed, or the arbitrary limits on those who qualify for assistance. But most importantly, Government must act immediately to speed the process, to get financial assistance into the hands of those who most need it, the members who are already past retirement age. In your evidence to the Work and Pensions Committee, 28th June 2006, you said that more than 7,000 of those affected were over the age of 65, yet your expectation was that within 6 months the number in receipt of assistance would only rise from “about 100” to “not far short of ten times that number”. During the same 6 months, again using your own figures, a further 2,000 people will have reached the age of 65.
The stress and consequential ill health caused by the failure to act swiftly is seen by Saga customers as a disgrace.
Saga’s website is highlighting this issue and providing an opportunity to sign an on-line petition calling for compensation for these victims. It is receiving hundreds of visits every day. We will continue to cover the subject in our magazine, and we intend to support the activities of the Pensions Action Group as it seeks to build further support. In the Autumn we plan to present the petition to yourself, the Secretary of State.
Saga calls for :
* Immediate action to accelerate assistance payments to all those affected scheme members over the age of 65; followed by
* Replacement of the limited assistance scheme with one which makes full restoration to all affected members of their expected accrued pensions entitlements
We believe this to be a just and affordable course of action. It would be action our readers would want and expect to see from a Labour government, and would signal its determination to restore confidence in saving for retirement and the future expansion of pension membership.
Saga Group Limited
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