A scandalous cover up: The DWP and Ombudsman let down millions of people promised an indexed Guaranteed Minimum Pension for life

Steve Webb, former Liberal Democrat minister, who piloted the change in pension law in 2014

Only two people given a total of £1250 compensation out of millions who lost out

This is a complicated story but bear with me. Under the old pension arrangements (abolished in 2016) employers who decided to contract out of the old SERPS scheme would save on their national insurance contributions (NICs) but promised whatever happened they would still maintain a Guaranteed Minimum Pension for their workers.

But they would not pay for the indexation of the pension once people retired. That money would be paid by the state. and still is for those who have the old state pension.

But from 2016 with the introduction of the new pension that would cease with the exception of people who received an occupational second pension in the public sector – and that includes ministers, MPs, civil servants as well as other public sector workers. This exception even covers any public sector worker who moved abroad to places like Canada and Australia where their basic state pension is frozen.

This change which could lead to people losing thousands of pounds over their retirement – was spotted independently by two knowledgeable people who having got nowhere with the Department for Work and Pensions complained to the Ombudsman. 11.5 million people affected had opted out of the scheme between 1978 and 1997.

Some 21 months ago the Ombudsman reported that they had been right to spot this. The report noted:

“The National Audit Office (NAO) and the Work and Pensions Select Committee considered that the DWP had provided insufficient and limited information to individuals about the potential negative impacts the new State Pension could have, particularly in relation to indexation on the GMP. The NAO said that some people were likely to lose out and could not find the information they needed.

DWP information was misleading

It concluded:

“The DWP communicated the impact of the 2014 Pensions Act legislative change to the public. ln communicating this change, the DWP said that individuals could increase their starting amount of new State Pension. However, people who were to reach SPA shortly after April 2016 were in fact unable to make significant additional NlCs to do this. The DWP’s information was thus misleading.”

Indeed the DWP gave the impression that the change would make a mere 36p a week difference when in fact people, especially women, would lose over their course of their retirement, thousands of pounds. It is very difficult to estimate how much, but a Treasury estimate on how much money those in the public sector will GAIN by keeping this right – suggests, if inflation stays at 2 per cent, it is £13,000 for every man and £18000 for every woman over their average life span. If it is 3 per cent, it is £19,000 for a man and £27,000 for a woman. Not 36p!

Once they had retired they could do nothing about it. The Ombudsman’s report says that between 2016 and today two million people have already been affected. The bulk of the people have still to claim their pension.

The ministry to confuse matters said that the new triple lock provisions for the basic state pension meant that on average people affected would only be between £2 a week worse off and £4 a week better off. But in fact that has nothing to do with the indexation of GMP, it was part of package of measures for the new pension.

Rob Behrens, Parliamentary Ombudsman

If that change wasn’t bad enough the last 21 months nothing has happened. The Ombudsman made straightforward recommendations and wanted the ministry to report back in three months. He was ignored.

“The DWP should ensure that their literature clearly and appropriately references that some individuals, who have large GMPs and reach State Pension Age in the early years of the new State Pension, may be negatively affected by the changes.
“The DWP should direct individuals to check their circumstances. Further, the DWP should provide details to the public about how they can check their circumstances.. We have recommended that the DWP should ensure that anyone with a complaint of injustice arising from the same maladministration can have their concerns fully considered.”

Ombudsman has no power to compel the DWP to redress the injustice

Well so far the DWP has only offered to produce a fact sheet and not made any attempt to contact a single person who was misled . And the Ombudsman – who has no power to compel people to follow his recommendations – looks like letting them get away with it by agreeing to the offer. So only two people – the complainants Mr Smart and Stephen Kenny – have been compensated -offered £500 and £750 each respectively.

Despite some heroic efforts by Stephen Timms, the chair of the Commons Work and Pensions Committee and some questions from me the ministry has stonewalled in providing detailed information. Both the Ombudsman and the DWP are also silent on how the law was changed in 2014 -since the money was paid out before under the old system and those in public sector rather than the private sector now get it through their occupational pension.

Some readers might find this story eerily familiar. If you are a 1950s or 1960s woman it sounds like a rerun of the denial of pensions to millions of women between 60 and 66. Misleading information, nobody being told, and then no redress.

But there is also something alarming in this tale for the WASPI women who have placed their faith in the Ombudsman to save them. First compensation for the potential loss of tens of thousands of pounds is just £500 and £750. Secondly it could suggest if maladministration is proven that the DWP will just compensate the six women involved in the complaint and ignore the rest of the 3.8 million. Thirdly it looks like the DWP may ignore the Ombudsman’s recommendations -knowing he can’t compel them to do anything – or make it so difficult and obtuse for the women to claim that they will get nothing. After all you can’t prove you never had a letter!

A thank you to one of my readers Christopher Thompson who contacted me about this and helped with unearthing some of the key facts in this story.

18 thoughts on “A scandalous cover up: The DWP and Ombudsman let down millions of people promised an indexed Guaranteed Minimum Pension for life

  1. I am one of the woman from the 50’s and 60’s time where i was not informed that i would not be able to retire at 60 and had to wait till this yr to retire, i was also one of the ppl who would have paid graduated pension from 1970 to 1975 i wasn’t paying serps as i worked for my local council and had a private pension but since i became a pensioner i found out the 5yrs of paying graduated pension i will not get back because of the new way the pension has been done so all those who would have left school by time they was 15 would have paid 5yrs worth but frtiends who stayed on and went onto further education and would not have paid any still get the same state pension as i do . so what happened to the 5yrs that i paid that money it was surpose to be a top up pension and at the time this was going on men didn’t pay any stamps after they reach 60 because they had to wait till they was 65 so again woman lose out and those woman from the period i was born also lose out everytime i ask about it i get told they done it so its fair to everybody to get the same even if they didn’t pay the top pension back in the 70’s and serps later than that
    This is all wrong i have lost out on that money that i paid as well
    Sandra Bergman

    Liked by 1 person

  2. I’m one of the retired miners who’s been fighting for my pension monies back ,I thought we would with the select committee inquiry did a scathing verdict on government behaviour and made numerous recommendations and these inquiry members were mainly conservatives only for Boris and his ministers just ignored its own select committee and keeping the 4 billion plus they took all earned by ourselves in those working conditions dieing at 200 a week some on 10£ a week now I read my contracted pension is also been down graded ,the people and professionals can’t keep letting Boris run riot with peoples own monies then remove the ability to challenge in court/ ombudsman what the hell as this country and government become ~N Korea absolutely gutted and devastated for the few dieing miners that are still existing ! Help us for gods sake

    Liked by 1 person

    • Your are spot on Archie, no way can we let Boris carry on robbing the people that have paid in their hard earned cash and to think it’s alright to stop us challenging him !!! It’s not on, even Dick Turpin wore a mask !!! We have to stand up to Boris and his cronies and whatever it takes we have to be prepared to fight for our rights and all stand together.

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  3. FFS this is a rotten bunch of twisters embedded in the DWP & in the Cabinet – they’re all aware for sure. Just like they were aware of the 50’s born women and instead of paying they drew up the drawbridge and kept a code of silence.

    The NAO should now be investigating both this and the 50’s born pensionless situation – with DWP admitting “no Impact Assessments”. This is all on top of the latest DWP cock-ups and lies about a computer glitch when it was staff practice to overlook records of female pensioners. This is wholesale discrimination of women and now some men with the Contracted-out fiasco.

    Liked by 1 person

  4. I am a miner who’s fighting HMG for my own pension monies back you will know the Beis committee as just delivered a scathing verdict on government actions and made numerous recommendations to give us monies back and Boris as just ignored his own mps inquiry! Now I find out that my serps amount not longer increases as well a double whammy HMG is about to take another 2 billion pounds that we worked for in appalling conditions -it’s not there cash we’re dieing at 200 a week and now he’s moved the ability to go to court/ombudsman by ignoring them you cannot treat your OWN people like this some of us on a tenner a week and they just removed 8£ billion in total!! We need help from experienced lawyers we’re all this going to end this isn’t a government for the people the prime ,minister and their ilk are abusing there positions and abusing their power !! Help us thank you

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  5. Outrageous. Political statements are PR or worse ( like the red bus on Brexit). If UK govt. can contact individuals re tax they can & should re pension. The Ombudsmen should have teeth…no crumbs and even so called triple lock now under threat… Please ask Mr Starmer what he would do if in charge?!

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  6. No no no, they cannot only compensate the 6 1950s women complainants as it was they that told the other 1950s ladies not to send any more letters and it would be judged for everyone from the 6 letters, and eveyone would be treated the same !!! Once again I see them changing the goal posts to suit themselves !!! I cannot believe these people, how on earth do they sleep at night, I think if they only compensate the 6, the 💩💩💩💩 will really hit the fan, we’ve said all along that we are not going away and if they try to pull this trick, they’ll be in for a big fight and get the shock of their lives !!!

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  7. Well, it’s hardly surprising given that “Golden Goodbyes” seem to be run of the mill for disgraced/adjust to life politicians. I can’t believe that Derek Mackay got 50 grand for a resettlement grant, and includes others such as Aileen Campbell, Gail Ross, Ruth blooming Davidson, just to mention a few. There should be enough money to go “Back to 60” for women. I am disgusted that I have to work until I’m 68 before I get a basic pension. I have looked after myself since I was 18 and never claimed any benefits (not true, £6 housing benefit for 6 months and without a credit card would have been up SCWAP). I have lost all faith in any fairness in this country and should not be really surprised that the workforce which keeps the entire UK going are treated like ——g —-!

    Liked by 1 person

  8. Absolutely disgraceful. This Conservative government is not fit for purpose and to run this country. I am a WASPI women, informed at 58 like many other millions of women that I would not be receiving my State Pension until I was 66 😡. Two years notice for a 6 year increase. The men received 6 years notice of a 1 year increase and this Government class this equality!!! I have been robbed of £48,000. I wonder how they spent mine and many other women’s pensions? This Government just stonewalls this issue and hope we will go away or just crawl into the corner and die!!!! Conservatives will never get my vote in my lifetime!

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  9. Why can’t we take these rob dogs to court .I’ve worked all my life 41 years for what I could have invested my money and got a good return without being cheated .

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  10. Well done David. Rob Behrens continually lobbies for own initiative powers but what is the point of that if nothing happens as a result of an upheld investigation report? The fact that he doesn’t lobby for powers of compliance tells its own story.

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  11. I never received a letter. Also, with the Court ruling of November 2020 against Lloyds bank, I’m still waiting for BT pensions to do something about recalculating the GMP part of my pension that I transferred out to SYPA. I’ve checked carefully and I do qualify, but all BT keeps saying is ‘It’s a complex area’. All women should be aware that transfer payments made since 17 May 1990 and check if any additional value is due as a result of GMP equalisation.

    The new judgement, issued on 20 November, ruled that Lloyds Banking Group pension scheme trustees are legally responsible for equalising the GMPs for the employees who transferred out of one of its DB pension schemes.

    The ruling means that organisations should revisit historic cash equivalent transfer values (CETV) that were previously not equalised, and top up where necessary. The judgement does not force organisations to actively correct all pensions transfers, however, employers may look to do so to avoid legal proceedings from members affected.

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  12. So where does that leave us? Is there somewhere we can check or claim this money back. I was born in 1954 and have always paid the full NI contributions. Everyone is also forgetting that we carried on paying this after 60 when this should have been stopped. I had to wait to retire when my pension started to be paid out to me when I was 64. I suffer with ill health now and struggle financially. I worked from the age of fifteen non stop, working in Payroll and I was never notified about anything. Why oh why will the Government not pay us?

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  13. What a surprise! Our government has found yet another way of robbing the hardworking but downtrodden worker but ensuring they, and their flunkies, are exempt. Watch out for them reneging on the ‘triple lock’…. that’s next. It’s easy to take these unscrupulous actions when you can just dictate a change of law to say it’s okay for the government to steal and breach contracts (if you don’t have an ounce of integrity). Better still, have an impotent body to investigate their conduct, knowing there will be no repercussions – surprise they waste the money on the Ombusman services. I’m one of those who had 6 years pension stolen and they got me with SERPS too. How long will it be before they support, rather encourage, euthanasia for pensioners? If they are quick they can get me before they have ever paid back a penny for my 42 years of contributions.

    Liked by 1 person

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