A group of pensioners, who lost some or all of their pension savings when the companies they worked for collapsed, is trying to get compensation from the Government.

They say that the Government encouraged them to put money into company pension schemes, promising that they were guaranteed. However, when their scheme went bust, many pensioners found that in fact they lost a lot of the money they had saved towards their retirement. The vagaries of the Government’s pension scheme funding requirements meant that they only had a 50-50 chance of getting the benefits they were entitled to in the event of a company going bust. Some guarantee.

The Parliamentary Ombudsman found in March that the Government were guilty of maladministration and should compensate the pensioners who lost out. The Government refused to pay anything, because they said it would be too expensive – they initially estimated £15bn, but later agreed that the cost would be much less, £3.7bn.

Now the pensioners are taking the case to court, trying to get judicial review of the Government’s decision to ignore the Ombudsman’s ruling.

Ordinarily, if you make a legal claim and you lose then you have to pay not only your own legal costs but also the legal costs incurred by the other side. However, the Government does not usually enforce this rule in cases which are of significant public importance where the claimants have not got much money so would probably be put off litigating if they had to run the risk of incurring many thousands of pounds of costs liability if they lose. Cases like this.

In this particular case, the pensioners’ solicitors asked the Government to confirm that they would not try to get their legal costs back from the pensioners, even if the court eventually rules in favour of the Government. They are not asking the Government to pay the pensioners’ legal costs, only to confirm that, win or lose, they will not try to make the pensioners pay legal costs that the Government itself incurs. The Government has refused.

The costs bill could – if things go all the way to the House of Lords, which is eminently possible in the circumstances – reach seven figures. This sounds like a lot, but when you consider that the amount in dispute is going to reach TEN figures, the Government stance starts to look fairly petty. It looks a lot like the Government are trying to put the pensioners and their lawyers off the whole idea of litigation by scaring them with the prospect of a hefty legal bill, not just for their own costs but also for the Government’s legal costs.

The reason for blogging about this today? I wanted to share this excellent cartoon from The Times.