Benefits Agency loses staff and pension role after Serps error

16 Mar 00
A blunder by civil servants of 'gargantuan proportions' has cost the Benefits Agency dear, with the government announcing that it is to lose all its policy and operational responsibility for pensions.

17 March 2000

On Wednesday March 15, MPs were told that Benefits Agency staff had been giving out misleading information about the State Earnings-Related Pensions Scheme (Serps) for more than ten years. Reports by the National Audit Office and the Parliamentary Ombudsman suggested the cost to the taxpayer would be at least £2.5bn.

At the same time, Social Security Secretary Alistair Darling announced that a new pensions directorate would be set up. Up to 10,000 people working for the Benefits Agency will transfer to the directorate, which will remain under the auspices of the DSS.

The two reports highlighted 'an extraordinary lapse by civil servants', following the passage of the 1986 Social Security Act. This halved the amount of Serps that widows or widowers could inherit on the death of their spouse and was meant to be effective from April 5, 2000. But the agency failed to update its publicity materials or ensure staff understood the change.

'It is a classic case of Whitehall incompetence crippling the will of Westminster,' said David Davis, Public Accounts Committee chairman. 'Careful planning was scuppered by the carelessness of the civil servants whose job it was to deliver change.'

The government has been forced to delay the effective date of the legislation by two-and-a-half years and introduce a redress package to protect those who were misled.


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