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The Department for Work and Pensions have taken reasonable and appropriate action to deal with the Inherited SERPS problem and have made considerable progress in improving their organisation and systems for dealing with the public, according to a report presented to Parliament today by Sir John Bourn, head of the National Audit Office. The provision of accurate information to the public remains a key business risk for the Department that needs close monitoring and management.

Today’s follow-up report by the National Audit Office examines the progress by the Department for Work and Pensions in implementing the recommendations on Inherited SERPS set out in reports by the Public Accounts Committee in 2000 and 2001. The changes set out in the Social Security (Inherited SERPS) Regulations 2001 met most of the Committee’s recommendations for a suitable scheme of redress. The Department have since invested considerable resources in publicising the changes and have taken reasonable steps to ensure that more than 20 million individuals were made aware of them before the Regulations came into effect in October 2002.

Overall, the project to inform the public about the changes set out in the Regulations achieved its objectives, was managed well, and was in accordance with the Department’s prevailing risk-management framework. The most complex part of the communication exercise was a mail-shot to the just over 5 million people expected to reach state pension age between October 2002 and October 2010. This required careful planning to ensure that the messages were clear and that a full follow-up services for customers was tested and in place. For a number of reasons, the mail-shot was completed to a later timescale than had been originally envisaged, and some contributors whose spouses were affected by the Regulations were given limited time to make alternative pension arrangements. The Department could have done more to bring the possibility of potential compensation to the attention of relevant customers.

The Department have made considerable progress in implementing the Public Accounts Committee’s other recommendations to improve aspects of the organisation and the systems for dealing with the public, but acknowledge more still needs to be done. In particular, the Department have reorganised to provide a better focus on different customer groups, rolled-out a departmental intranet, standardised procedures for the provision of information and advice, and the development and review of information products, and improved the monitoring of complaints received from the public.

The Department (and their agencies: The Pension Service, Jobcentre Plus and Child Support Agency) intend to make further improvements and ensure that improved standards and procedures are embedded throughout the organisation. In doing so, the National Audit Office report recommends that attention should be paid to the following areas:

To ensure staff provide up to date information to customers

• make sure that the benefits of the intranet for disseminating information among staff are fully realised; and

• develop checks (including ‘mystery shopping’) on the accuracy of staff communications with the public, whether by letter, telephone or face to face.

To ensure leaflets and other information products are up to date

• ensure that sufficient time is allowed in the quality assurance processes for input by external parties, such as the Department’s independent Social Security Advisory Committee and voluntary bodies, to maximise their contribution;

• assess the relative effectiveness of different channels of communication; and

• ensure, as far as possible through routine checking, that departmental literature available in public places is up-to-date.

To improve correspondence to and from customers

• improve the quality of letters sent to the public to avoid ambiguous or confusing communications; and

• make better and more consistent use of the data collected on complaints, so that trends or themes can be identified.

Sir John Bourn said today:

“The Inherited SERPS problem was a major failure of administration which caused anxiety and distress for many people. I welcome the Department’s positive response to the recommendations made by the National Audit Office and the Committee of Public Accounts and the action which the Department have taken so far to reduce the likelihood of such a mistake being made again.

“However, more still needs to be done. It is crucial that the momentum generated over the past two years is maintained if the Department’s customers are to be confident that the information and advice they receive is accurate, timely and delivered in the most appropriate manner.”

Notes for Editors

1. The Inherited SERPS problem arose when the (then) Department of Social Security failed to advertise a change in legislation that would have reduced, from 100 to 50 per cent of a deceased person’s entitlement, the maximum amount of SERPS pension that could be inherited by a surviving spouse. The change was set out in the Social Security Act 1986 and was to come into effect in April 2000. Until as late as 2000, the Department continued to give incomplete and incorrect advice about the change to the public. As a result, an unknown number of people may have made decisions about their future pension provision based on an incorrect understanding about the pension that would be inherited by their spouse after their own death. When this became known in 1999, it caused considerable distress to many people who had thought they had made adequate provision for their spouses. The problem shed considerable light on poor communications and customer handling by the Department, as well as on major organisational failings. These included inadequate arrangements for ensuring that leaflets were correct; for ensuring that staff were kept up-to-date with changes in legislation; for identifying and managing risk; and for managing correspondence and complaints from the public.

2. The Public Accounts Committee produced two reports on the Inherited SERPS problem, as follows:

• State Earnings Related Pension Scheme: The Failure to Inform the Public about Reduced Pension Rights for Widows and Widowers, 34th report Session 1999-2000 (HC 401); and

• The Draft Social Security (Inherited SERPS) Regulations 2001, Fifth report Session 2000-01 (HC 243).

Today’s NAO follow-up report examines progress by the Department for Work and Pensions in implementing the recommendations in these two reports.

3. Press notices and reports are available from the date of publication on the NAO website at www.nao.gov.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.

4. The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office which employs some 800 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

Press Notice 21/03 All enquiries to Hedgie Gundry, NAO Press Office Tel: 020 7798 7964

To read the report in full, please go to: www.nao.gov.uk/pn/02-03/0203497.htm