Investigation
Jump to
8. During my investigation members of my staff have scrutinised numerous DSS files and papers on the development and the subsequent implementation of policy on SERPS (although some files which might also have been relevant had been routinely destroyed in the course of time). Jointly with NAG staff, my staff have also interviewed DSS officials who were involved in the implementation of the provisions in the 1986 Act. The conclusions which I reach at the end of this report are based on what has emerged from that programme of work.
Events in 1986
9. What was then the Social Security Bill was extensively debated in both Houses of Parliament in 1986. Briefing notes for Ministers who were to speak in those debates drew attention to the proposed halving of the SERPS inheritance provision as an issue likely to be controversial. The briefing notes said that the then existing provisions were widely regarded as overgenerous and that the proposed changes would bring the arrangements more into line with those in occupational pension schemes, where inheritance at 50 per cent tended to be the norm. The notes added: "People will have plenty of time to make alternative provision for their survivors if they wish." A debate on the proposed amendments to SERPS took place in Standing Committee in the House of Commons. During that debate on 25 February 1986, the then Minister of State for Social Security said: "We have every intention of mounting a major publicity campaign to herald the pension changes contained in the present Bill, should it become an Act..." (Official Report, Standing Committee B, col.451). The 1986 Act received Royal Assent on 25 July 1986.
DSS Leaflets
10. DSS produce a wide range of publicly available leaflets, which are updated from time to time, and which give information about social security benefits. The leaflets are readily available at BA's local offices, at post offices, and at other public places such as citizens' advice bureaux; and they are issued to individual enquirers in response to routine enquiries. Most of the leaflets contain a disclaimer to the effect that they have no status in law and should not be treated as a complete and authoritative statement of the law.
11. After the 1986 Act received Royal Assent DSS produced a leaflet in September 1986 entitled: "Reforming social security: saving for retirement pensions." It summarised the changes brought about by the 1986 Act. Of the change to SERPS inheritance rules it said: "Widows, and widowers over 65, will be able to inherit up to half their partner's SERPS pension, instead of up to the full amount. This particular change will not happen until the year 2000 and so will not affect anybody widowed this century". After this lapse of time it is not now clear who the intended recipients of the leaflet were, the extent, if any, of its distribution, or for how long it was distributed.
12. On 26 November 1986 the DSS section responsible for promulgating procedures and instructions on long-term benefits, which is based in Newcastle upon Tyne, consulted other DSS sections about a draft amendment sheet intended for insertion into a DSS leaflet NP32. That leaflet was entitled "Your retirement pension". It had first been published in February 1985, and was revised in August 1985 and September 1986. The September 1986 amendments had not covered the changes introduced by the 1986 Act. Leaflet NP32 was routinely included in claim packs sent to prospective state pensioners. The Newcastle upon Tyne section pointed to the need to cover in a proposed revision planned for April 1987 the new rules regarding additional pension calculation (paragraph 7.i ). In a response dated 28 November 1986 the section in London respopsible for policy on the changes to SERPS and on contracting out of SERPS recommended also including a sentence saying that after April 2000 a widow or widower would be able to inherit not more than half of a late spouse's additional pension. That suggestion unfortunately was not acted upon. The papers that survive do not reveal whether any discussion of the London section's suggestion took place, or whether other sections of DSS offered comments on the draft amendment. Nor, after this lapse of time, have the interviews conducted with DSS staff been able to establish that. In the event, the leaflet was not amended by way of an inserted sheet as had been proposed, but by a full reprint in April 1987 which made no reference to the April 2000 changes to inheritable SERPS. There is no indication in the papers that survive that the final version of the text of the leaflet was subjected to any independent quality assurance before printing and distribution. There is also no indication that consideration was given to publishing an amendment to the leaflet before April 1987, so as to reflect the changes in SERPS introduced by the 1986 Act.
13. Apart from the leaflet produced in September 1986 (paragraph 11), none of the many leaflets dealing with pensions published after the enactment of the 1986 Act and before October 1995 (see paragraph 15 below) referred in any way to the future changes to the SERPS inheritance rules applying from April 2000. The reprint of leaflet NP32 published in April 1987 (paragraph 12) covered the first two changes to SERPS detailed in paragraph 7, but of inheritance it said: "A widow can inherit the whole of her late husband's pension and add this to her own additional pension ... A widower can also make use of this provision if his wife dies when they are both over pension age." Another DSS leaflet, leaflet NP36, which was entitled "Your benefit as a widow" was revised in September 1986 and that revision said of additional pension: "If your late husband died on or after 6 April 1979, then on top of your basic widowed mother's allowance or widow's pension you may get an additional pension. This is based on your late husband's earnings from 6 April 1978."
14. Leaflet NP32 was superseded in April 1989 by a different leaflet, leaflet NP46, which was entitled "A guide to Retirement Pensions". There were substantial differences between leaflets NP32 and NP46 in their presentation of information. Leaflet NP46 was much more detailed and was primarily intended for the use of advisory bodies such as citizens' advice bureaux, and of members of the public who wanted to know more about state retirement pensions. A simpler leaflet, leaflet FB6, entitled "Retiring" gave basic information on state pensions and was intended for general readership. Of additional pension the section on SERPS in leaflet NP46 said: "Widows and widowers may receive the Additional Pension earned by their spouse. Details are given in the section 'Groups for which there are special provisions' ". That section, in referring to widows who were already receiving a pension at the dates when their husbands died, said: "You will get all of his Additional Pension ...". Revised editions of Leaflet NP46 were published in April 1990 (with an amendment in July 1991), April 1993, August 1994 and April 1995. The wording in respect of the SERPS inheritance rules remained unchanged in each of those editions. Leaflet NP36 (paragraph 13) was superseded in April 1988 by a new leaflet, leaflet NP45, entitled "Widows' Benefits". Revised editions of that leaflet were published in April 1990, April 1992, April 1993 and April 1995. None of those editions made reference to the future change regarding SERPS inheritance. Of other relevant DSS leaflets, leaflet PEC2 entitled "About Pensions", which was published in October 1995, made only brief mention of SERPS without referring to inheritance. A fact sheet NP 39 entitled "Your Additional Pension statement" designed to be read alongside additional pension statements - was published in April 1987. Under the heading "If you are widowed" it said: "you may also be entitled to all or part of your late husband's Additional Pension when you retire". The fact sheet was revised in January 1994 and made no comment on SERPS entitlements for widows. In summary, the leaflet produced in September 1986 (paragraph 11) apart, there was a failure for ten years to refer at all to the future changes in SERPS inheritance provisions in the leaflets DSS were publishing.
15. Following the enactment of the Pensions Act 1995 BA conducted a review of leaflets NP45 and NP46. Both leaflets were revised in the spring of 1996 and this time both covered all the changes to SERPS, including those concerning the inheritance rules. The April 1996 edition of leaflet NP46 said, in a section headed "Widows": "If you are widowed on or after 6 April 2000 you will get half of any Additional Pension... earned by your late husband". The April 1996 edition of leaflet NP45 gave a detailed explanation of how a late husband's additional pension would be worked out for those widowed on or after 6 April 2000. It said: "You [the widowJ will receive half that weekly amount". Leaflet PEC3 entitled "The 1995 Pensions Act" had meanwhile been published in October 1995, and that leaflet said: "The way pensions from [SERPSJ are worked out will be changed for people who reach state pension age or are widowed on or after 6 April 2000. This will mean that people will get less SERPS pension than they would have got without the change." It added: "But if you are already getting a SERPS pension, you will not be affected." Leaflet PEC3 was re-published in January 1996. DSS have since explained that the change being referred to was that in paragraph 7(ii) above, not paragraph 7(iii).
Instructions and guidance given internally to DSS staff
16. In December 1987 the then head of DSS's policy group wrote to other senior officials asking them to make arrangements to bring the reforms introduced by the 1986 Act to the attention of DSS staff. As a result of that, in January 1988 internal circulars were issued to all DSS staff holding copies of the following instructions and guidance material: the Pensions Instructions and Procedures Code, the Widows Instructions and Procedures Code and the Pensions Law Code. The two Instructions and Procedures Codes each contained guidance on how staff were to process then current benefit claims. The internal circulars outlined the changes to retirement pension and widow's benefit arising from the 1986 Act, including the change to the SERPS inheritance rules, and said that appropriate amendments to all three codes would follow in due course. The Pensions Law Code was indeed amended in August 1988 to show the change in the SERPS inheritance rules which was to apply from 6 April 2000. Corresponding amendments were not made to the other two codes which were replaced in 1989. Their successor documents took the form of operational guides which gave instructions only on how then current cases were to be processed. Future changes and their implications were not covered at all.
17. In April 1995 a guide to staff entitled "The Benefits Information Guide", and which was based on a guide originally produced for BA's southern area, was distributed to relevant BA staff. The precise extent of its distribution, and the extent to which staff in general were aware of its availability, is not clear from the still surviving papers. The guide included a section headed "Reforms relating to Additional pension (SERPS)" which included guidance saying: "Widows and widowers over 65 will be able to inherit up to half their partner's SERPS pension, instead of the full amount. This particular change will not happen until the year 2000."
18. Not until 12 January 1999 was a "Pensions Bulletin" issued to all BA staff who dealt with pensions. That bulletin contained a recommendation that it should be discussed during the next weekly training session. The bulletin drew explicit attention to the forthcoming halving of the SERPS inheritance entitlement. A further bulletin issued on 23 February said that recent press coverage had "raised the profile" of the, forthcoming change and that a line for staff to take in response to enquiries was under consideration. The line to be taken was set out on 15 March in the form of question and answer briefing in a further bulletin. On redress, it instructed staff to say: "Cases where it is alleged that a customer has been given wrong information are considered under a Special Payments Scheme which we have [see paragraph 30 below.]
However, a financial loss has to have occurred before we are able to consider such a complaint". Further bulletins were issued to staff on 18 March and 13 April instructing staff that all customer enquiries on the issue were to be treated with extreme sensitivity, and telling staff that an action plan to deal with it was being formulated. The bulletin of 13 April changed the recommended line to take on redress to: "We are aware of the concern that has been raised and that this may be an issue for many people. We hope to resolve this issue as soon as we can".
19. The consequences were that up to April 1995 few, if any, operational staff within DSS and BA were likely to have been aware of the changes to the SERPS inheritance provisions due to take effect in April 2000. Even after April 1995 the future changes were unlikely to have been in the forefront of the minds of many of them. Indeed, even after the start of 1999 there could still have been some BA staff who had an imperfect grasp of the changes due to take effect in April 2000 and of their implications. During an Opposition Day debate on widows on 24 June 1999 a Member told the House of Commons that evidence existed that as recently as April 1999 one or two inaccurate letters about SERPS had been sent out by BA (Official Report, Vol. 333, col. 1303).
