Our fear is that the original maladministration in this case may well now be compounded by a redress scheme that has all the makings of an administrative disaster

Public Administration Committee

In its report the committee branded the Serps saga as "extraordinary" saying the whole affair represented "a political and administrative failure that will cost the public purse many billions of pounds".

Story of 'injustice to individuals'

They said it represented "a story of injustice to individuals" and revealed a gap between making policy and the actual administration of that policy.

Pensions Minister Jeff Rooker has called the original Serps mistakes the worst case of government maladministration since the war.

And the committee put on record its "astonishment ... that those politically and administratively accountable for the operation of the department (DSS) were not aware, or made aware, of a problem that was to cost billions of pounds to correct".

They said those failures were compounded by "the failure of the department between 1996 and 1999 to take adequate action to inform their staff and the public perpetuated an already unsatisfactory situation".

"Our fear is that the original maladministration in this case may well now be compounded by a redress scheme that has all the makings of an administrative disaster," the committee said.

Millions contributed

Millions of pensioners have been contributing to Serps since it was first introduced in 1978.

They had believed the scheme would ensure that their surviving partner was looked after in the event of their own death.

But in 1986 the Conservatives changed the rules so that the partners of people who died on or before 6 April 2000 could only receive half of their previous pension entitlement - effectively �50 per week.

Those changes were supposed to be the subject of a publicity campaign to allow those affected to make alternative arrangements, although that campaign never happened.

The Labour government had already announced that the application of the new rule had been postponed and that delay has now been extended.

Thousands affected

Several thousand pensioners are thought to be affected and the changes in the rules have confused many and angered others.

In August, the Commons Public Accounts Committee suggested that the mix-up could cost more than �13bn and take 50 years to put right.

The 1986 changes were properly publicised for only a year and pension information published in 1987 failed to mention the changes.

MPs also said in August that any compensation for those affected may not reach everyone as the Department for Social Security does not hold all their addresses.

Serps was set up in 1978 to provide a state second pension for those without occupational or personal pension schemes.