UK chancellor promises £6bn to pension victims
UK - Gordon Brown will quadruple the amount of money available to members of bankrupt occupational pension schemes.
In a move aimed at winning older votes in the next general election, Brown promised to spend £8bn (€11.8bn) rather than the original £2bn allotted to the Financial Assistance Scheme.
That larger sum is the total payable over the next 60 years. Tim Keogh, worldwide partner at Mercer, estimated that the present sum needed to reach £8bn over the next six decades could be in the order of £2bn.
The UK Pensions Act 2004 provided security for members of schemes whose employer disappears into insolvency leaving an underfunded scheme to pay out diminished benefits, but only from April 2005.
Approximately 185,000 members and their families, however, found their benefits severely diminished prior to this date. They have campaigned hard against the injustice as they became pension scheme members in good faith and saw a loss in benefits through no fault of their own.
The UK does not have a longstanding safety net or hardship fund for pension scheme members.
In his speech, Brown suggested that all these people would receive about 80% of their entitlements. The Financial Assistance Scheme, which deals with such cases, currently has a real limit of £12,000 a year, which will be lifted to £26,000.
The Pensions Act, via the Pensions Protection Fund promises 100% for retirees and 90% up to a real limit of £26,050 per annum for those of working age.
Last month the Parliamentary Ombudsman, who oversees government policy and behaviour in the public interest, ruled that the government was responsible and ought to pay compensation to members of occupational pension schemes who had suffered as a result of employers' insolvency and inadequate funding.
Government made little acclamation of the Ombudsman's findings at the time but Brown's announcement in today's Budget speech seems to be the response.