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BeeHive  >  BeeLines  >  Financial Assistance Scheme Blues

Financial Assistance Scheme Blues

The Financial Assistance Scheme (FAS), as you probably know, was established in May 2004 to provide financial assistance to people whose final-salary pension schemes wound up between 1 January 1997 and 5 April 2005 where the employer became insolvent before 28 February 2006 (schemes in wind up after 5 April 2005 are covered by the PPF). People who become eligible for the FAS’ assistance will receive a top up broadly equivalent to 80% of their expected pension, subject to a £12,000 cap. Not much for some people I guess, but better than a poke in the eye with a sharp stick.

Even though the scheme’s been going for nearly two years now it’s still in the early stages of getting its act together it seems. Certainly this week’s announcement from the Department for Work and Pensions implies that much of the preparatory work still needs to be done to get payments out to people who have been left high and dry after their pension schemes have collapsed.

In the case of a wound up pension scheme, the FAS must be notified of the scheme's name and the name of an employer in relation of the scheme. For schemes still winding up, the FAS must be notified of the scheme's name, the name of an employer in relation of the scheme, the pension scheme registration number and the name and address of at least one trustee of the scheme. Not too much to ask really, but there seem to be problems even with that.

The notification period for the Government's FAS comes to a close on 28th February; or to put that another way, fairly soon. Trustees, administrators and members of potentially eligible occupational pension schemes have until then to give FAS some basic details and begin the qualification process.

Echoing this fact, Stephen Timms, the current Minister for Pension Reform said:

"The FAS began making payments in December 2005 and I am pleased that we are able to provide invaluable help to the first of those eligible for assistance from the FAS. However, this is just the start, and there remains a considerable amount to be done to ensure that those eligible for help start getting it."

"In order for us to establish who is eligible and what level of help they are entitled to we need scheme trustees and administrators to provide us with the relevant information. I urge anyone who thinks they belonged to an eligible pension scheme to check the FAS website to see if FAS is aware of their scheme".

It sounds fine, doesn’t it, to say that the FAS is now making invaluable payments to people at last, and I guess we’re all as pleased that that’s the case, but there are some disturbing facts about all this. There are an estimated 85,000 in the queue who could get payouts from the scheme, but it appears as though only thirteen people have so far received payments! (I calculate that’s about 0.015% of the job done to date. Not the sort of flying start you’d write home about really is it?) Sadly it appears that some people on the waiting list for compensation have either died already, are in ill health or have had to sell their home.

There is still some question as to whether the £400 million pledged by government over 20 years (but yet to be handed over) to fund the FAS is enough, but an estimated £16 million of the pot has apparently already been earmarked to pay for the cost of civil servants administering the scheme. This, obviously, raises the question of whether the priorities attached to this important scheme are right. It does to me, anyway.

 

27 January 2006

Sources:

1. DWP Press Release 'Financial Assistance Scheme - Notification Period draws to a close', 25 January 2006

2. The United Kingdom Parliament, Lords Hansard, 22 November 2005, Column 1577-1579

3. BBC News, 'Call to speed up pension payments', 25 January 2006

4. DWP, 'The Financial Assistance Scheme - an in-depth guide for trustees and pension professionals', August 2005

Any research and analysis included has been provided by us for our own purposes and the results of it are being made available only incidentally.

                                                                                                         

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