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ISSUE 1844 Monday 12 June 2000 Computer failure 'cost pensioners #40 million'

By Benedict Brogan, Political Correspondent

MORE than 250,000 people with private pensions have been deprived of investment income worth #40 million because of the Government's failure to tackle a long-running computer problem, the Tories claimed last night.

Since April 1997, 330,000 people who opted out of the State Earnings Related Pension Scheme (Serps) and into a private money purchase scheme have been entitled to rebates on their National Insurance contributions. But the Treasury confirmed last month that because of problems with the Department of Social Security's new NIRS2 computer system, 280,000 of those eligible for a refund have still not received money totalling #140 million.

The cash was supposed to be paid into their personal pensions, most of which are invested in the stock market through unit trusts. There, it would have enjoyed the spectacular returns recorded by equities over the past 18 months, adding considerably to their retirement income.

Instead, the cash is being held by the Treasury, where it earns interest of six per cent a year. By contrast, the Tories claim that the average managed pension fund enjoyed 35 per cent growth between October 1998 and March 2000. David Willetts, the shadow social security secretary, estimated the value of the lost investment - the difference between the interest offered by the Government and the return achievable by a pension fund - at #36.8 million.

Mr Willetts said: "The rate of compensation being paid by the Treasury is way below what the money would have earned if it had been invested. As a result, nearly #40 million has been lost forever from people's pension funds as a result of this incompetence."

"Social Security Secretary Alastair Darling has been complacent and inactive. Last September he wrote to all MPs promising that the problems of the computer would be tackled 'within the next couple of weeks'. But, as always, he has failed to deliver."

http://www.telegraph.co.uk/et?ac=000579381554028&rtmo=qXttMdq9&atmo=99999999&pg=/et/00/6/12/ncomp12.html

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-- (Dee360Degree@aol.com), June 12, 2000