DWP finances collapsed pensions with scheme top-up
UK - The UK government is extending its Financial Assistance Scheme by £935m (€1.31bn) to help 140,000 members of failed occupational schemes by combining the residual scheme assets with a government top-up.
Peter Hain, Secretary of State for Work and Pensions, said the additional money - £3.9bn in cash terms - will allow members to receive 90pc of their accrued pension up from the current level of 80% of core benefits.
The FAS will also be extended to include 11,000 members of schemes that were wound up by qualifying solvent employers, meaning up to 140,000 members could be eligible for assistance.
Hain said: "This builds on the substantial steps we've already taken to put right the unfairness they experienced. We believe this represents a just and final settlement - bringing the total commitment to £12.5bn in cash terms or £2.9bn in Net Present Value terms."
This decision follows the publication of the final Young Report - produced by Andrew Young, the Government Directing Actuary - which showed if the £1.7bn of residual assets in failed pension schemes are brought into government it would be possible to increase the level of assistance with just an additional top-up by the government.
Hain added: "Although the government has been criticised over this matter, these are huge amounts and it is right that we have been able to maximise the return from residual assets in the schemes which collapsed so that the public purse has value for money too."
Changes include a guaranteed 90% of accrued pension at the date of wind-up subject to a cap of £26,000; members in ill-health will be eligible for early payments from age 60 and tax-free lump sums will be available if the member's share of funds is sufficient.
Mike O'Brien, Minister for Pensions Reform, said: "This is part of a wider programme encouraging greater confidence in pensions, including recent reforms to the State Pension system, our deregulation package, and the creation of Personal Accounts. Taken together these will ensure a fair, sustainable and generous pension system for today's and tomorrow's pensioners."
Ros Altmann, independent consultant and pension campaigner, said: "It is not everything they deserve, but after years of fighting it seems to be the best that we can get the Government to agree and it does represent a major victory."