Financial Assistance Scheme
The Petition of residents of the constituency of Stone in Staffordshire,
Declares that pensioners who have lost all or a greater part of the pension due to failed occupational pension schemes have not been properly compensated by the Government under the Financial Assistance Scheme (FAS) due to the failure of pensions regulation, as proven by the Parliamentary Ombudsman and the High Court; that at the very least the Government must provide 90% compensation, which is not eroded by regulations and current FAS failings; that indexation should fully reflect that provided by original schemes; that backdating should be to scheme Normal Retirement Age and not an arbitrary May 2004 cut-off date; that a higher tax-free cash limit should be provided, irrespective of scheme asset share, to be paid on request; that access on early retirement is made irrespective of ill health (with an actuarial adjustment); that recognises the pre-retirement scheme revaluation basis; that has the provision of meaningful benefit projections; that recognises the harmful effects of the earnings cap on long-serving members.
The Petitioners therefore request that the House of Commons urges the Government to ensure those pensioners are properly compensated 90% or more of the true value of their pension through immediate amendment of the Financial Assistance Scheme.
And the Petitioners remain, etc.—[Presented by Mr William Cash, Official Report, Tuesday 23 March 2010; Vol. 508, c. 217 .]
[P000771]
Observations from the Secretary of State for Work and Pensions, received 9 August 2010:
The Financial Assistance Scheme (FAS) provides publicly funded support to those who have saved for their retirement throughout their employment and who have lost their pension as a result of the considerable level of under-funding of their pension scheme and the failure of their employer. The FAS delivers assistance to those whose defined benefit pension schemes began to wind up under-funded, between 1 January 1997 and, in general, 5 April 2005.
The FAS delivers assistance to members of over 900 different pension schemes and, as such, does not replicate each scheme's individual rules.
FAS Assistance is paid at a level of 90% of members’ expected pension, that is, the pension accrued to the date their scheme began to wind up, including revaluation at a standard FAS rate up to normal retirement age. The structure of assistance takes account of existing statutory requirements, for example, the date of the introduction of a statutory requirement to provide indexation and the providing of cash lump sums broadly aligning with tax rules.
For those whose scheme asset share is greater than 90% and whose assets transfer to Government, the FAS assistance calculation will ensure that members receive the value of their share of their scheme’s assets.
FAS assistance balances the need to provide a relevant safety net to pension scheme members with the cost to taxpayers, many of whom do not have occupational pensions.