Services and benefits

Draft legislation will soon be laid before Parliament to enable the Financial Assistance Scheme (FAS) to provide early reduced ill health payments to members who are:

• within five years of their normal retirement age; and
• unable to work* due to ill health; and
• likely to continue to be unable to work* due to their ill health through to their normal retirement age.

*if you have been advised to refrain from work due to ill health but you continue to work you may still be entitled to ill health payments

Normal retirement age is defined as;

1. The age specified in the scheme rules as the age at which that member will normally retire or:
2. 60 years where scheme normal retirement age is below 60 years, or
3. 65 years where the scheme normal retirement age is above 65 years

The proposed legislation is subject to the approval of Parliament and, at this stage, there is no guarantee that it will become law. However, should Parliament approve the legislation, early reduced ill health payments will become available.

If you satisfy the conditions of entitlement, you will be entitled to ill health payments from the latest of:

• The date the legislation for ill health payments comes into force, or
• The date we were first notified that you are unable to work due to ill health and likely to continue to be so until normal retirement age, or
• The date you reach five years before your normal retirement age.

If you would like to register for an ill health payment application form, you can contact us in a variety of ways including letter, email and telephone. Please note however that the email facility is a way of making general enquiries, it is not a secure route for sending personal information.

Registering for an ill health payment application form does not guarantee entitlement to ill health payments but enables us to start processing applications as soon as possible if the proposed legislation becomes law.

When contacting us, you will need to provide the following information.

Your:

• Name;
• Address;
• Date of Birth;
• Scheme's name;
• National Insurance Number.

Subject to the draft proposed legislation becoming law, we will send you an application form to complete and will request additional information and supporting evidence.

A pension scheme must successfully go through 2 stages to be eligible to help from the FAS:

• Notification
• Qualification

The FASOU can accept Notification of a scheme from a member of the scheme, a scheme Trustee or other professional adviser to the scheme. They can complete and return Part A of the FAS A1 application form to notify us.

For a scheme to be considered for Qualification for FAS purposes, part B of the FAS A1 application form must be also be fully completed and returned.

A non - downloadable version of the FAS A1 application form is available to view on this site.

In most cases your pension scheme trustees are the best people to ask about the FAS and you should contact them first. The FAS website carries details of qualifying pension schemes and details of schemes that do not qualify, as well as more detail on eligibility conditions.

Trustees of schemes in wind-up should keep in contact with their members. Their contact details should be on their correspondence.

If you do not know who your trustees are and would like to know more about them, please contact the FASOU on 0845 6019941.  The FASOU has strict rules about the data it is allowed to share, but may be able to provide you with this information.

If you belong (or used to belong) to a qualifying scheme it’s very likely that the trustees of your scheme have already been in touch with the FAS, but if you are unsure you can ask your scheme trustees if they have been in touch with FAS or you can check the FAS website to see if your scheme has qualified or to see whether somebody has already notified us. If not, call us on 0845 601 9941.

The FAS will only pay assistance to eligible members of schemes that have successfully completed the qualification process. The FAS website lists those that have already qualified. The website also lists schemes that did not properly complete the notification requirements or that do not meet the qualification conditions. If your scheme does not appear on the website, or has previously failed and may now qualify for the FAS you should contact your trustees or call us on 0845 601 9941.

The Pension Protection Fund came into operation from 6th April 2005. This Fund compensates members of eligible defined-benefit pension schemes where the employer has become insolvent and there are not enough funds in the pension scheme to cover Pension Protection Fund levels of compensation. For more information, speak to the trustees of your scheme or visit the Pension Protection Fund website at www.pensionprotectionfund.org.uk.

There are limited circumstances in which schemes sponsored by employers who have not become insolvent might be eligible for help under the FAS. These circumstances include:

1. schemes sponsored by employers like:
   • trade unions;
   • charities; and
   • public-sector organisations;

   who cannot become insolvent and so would not otherwise qualify for FAS help.

2. schemes where the trustees have entered into a compromise agreement which avoided insolvency;
3. circumstances where the scheme manager can accept an insolvency event that has occurred overseas if he is satisfied that it is similar to one that we accept for UK purposes.

Further changes are expected to be in place by August 2008 to allow other schemes with solvent employers to qualify for FAS.

Some pensioners may be eligible for Pension Credit if their income is below a certain amount, but they will have to meet other eligibility conditions including levels of savings. Some pensioners may also get help in the form of Council Tax Benefit and Housing Benefit if they meet the eligibility conditions. Contact The Pension Service on 0845 60 60265 or visit www.pensionsservice.gov.uk to find out more.

The accrued pension is the amount of pension a member had accrued (i.e. built up) within their scheme before they left the scheme (or it started to be wound-up).

Normal retirement age is defined for FAS purposes as the age that is stated in the scheme rules as the age at which you normally retire (but cannot be before age 60 or 14 May 2004, whichever is the later).

We should be able to provide you with an update up to 6 months before your scheme normal retirement age. Contact the FAS Operational Unit and we will confirm whether we have been given your personal details.

If we are unable to confirm that we have received your information, we will take some details from you to enable us to pursue your application with the scheme trustees or administrators.

The Additional Voluntary Contribution (AVC) arrangements offered by most final salary schemes involve either separate money purchase schemes; in house money purchase arrangements; or the purchase of added years within the final salary scheme.   

Typically AVCs are treated separately at wind-up and come higher up the priority order when assets are divided up amongst the scheme members. In such circumstances AVCs are not taken into account when assessing a scheme member for a FAS award.

However if a scheme can not separate AVCs from other benefits, FAS will take them into account.

In order to assess whether individual scheme members qualify for assistance the FAS unit requires scheme and, eventually, member details.  In the early stages schemes simply Notify us by providing four very straightforward pieces of information.  Schemes are then asked to provide Qualification information.  Although this is a little more detailed, it is the minimum information necessary to assess eligibility.

Once we have decided that a scheme qualifies, we collect member details.  Our expectation is that this should be supplied by whoever is holding this information.

We have kept our information requirements to a minimum in order to minimise the impact on trustees and administrators.  If this causes trustees or administrators difficulties they can speak to their Customer Account Manager. He/she may be able to suggest other ways in which we can help.

If you have taken a lump sum, this will affect your FAS payment. Typically, the FAS will convert the lump sum you have taken into an amount of notional pension. The notional pension will be added to your scheme pension to provide a total rate of scheme pension. The FAS will then top up that total rate of scheme pension to the appropriate level of your ‘accrued pension’.

Similarly, if you have taken a transfer into another scheme during the scheme windup process, the FAS will convert the amount of your transfer into a notional rate of pension and top that rate of pension up to the appropriate level of your ‘accrued pension’.

We are unable to provide projections at this time.

The FAS scheme is the subject of extensive debate and discussion about the scope and criteria for eligibility of the scheme. There have been changes implemented to the scheme which were announced in the 2007 Budget Speech and recently the statement given by the Rt. Hon. Peter Hain MP the former Secretary of State for Work and pensions will require consultation and changes to the law, but will clearly have an impact on potential future entitlement to FAS.

It is difficult  and potentially misleading therefore to provide a FAS projection which may be used for future financial planning.

Scheme trustees and administrators provide information to the FAS Operational Unit by completion of an “S1” form.

Information on the type of questions that are asked and how to complete this form are provided in the following leaflets:

The Financial Assistance Scheme - A guide to completing form S1 for Initial Payments

The Financial Assistance Scheme - A guide to completing form S1 for Annual payments

A member must have been a member of a qualifying scheme immediately before that scheme started to wind-up in order to qualify for FAS, therefore if you took a transfer before your scheme started to wind-up you can not be eligible for payment.

In general FAS is paid as a top up to the pension that members receive from their scheme. In circumstances where a transfer was taken or benefits were commuted after wind-up started then a ‘notional’ rate of pension is used in order to calculate the FAS payment. The notional rate of pension that we use for a member is either provided by the scheme or is calculated by us from the amount of transfer or commutation.

If the scheme provides us with a rate of pension that could alternatively have been secured with the transfer value or commutation then we will use that rate of pension instead of the transfer or commutation as the ‘notional’ pension. If the scheme cannot provide that information then we convert the cash amount of the transfer or commutation into a 'notional' rate of pension by applying actuarial factors to provide a reasonable estimate of the amount of flat-rate pension that could have been secured by way of bulk annuity.

The amount of State Earnings Related Pension or State Second Pension that a member receives by payment of a State Scheme Premium or by Deemed Buy Back, is not considered in determining the members’ pension (their ‘actual pension’). Instead, we base assistance on the rate of pension that could have been secured with the assets allocated by the qualifying scheme to the member that were used to buy back into the State Scheme

Capital sums, like lump sums and transfers, are converted into notional rates of pension in broadly the same way. We do this conversion by applying actuarial factors that provide a reasonable estimate of the amount of flat-rate pension that could have been bought by way of a bulk annuity for the member using the amount of lump sum or transfer at the time the lump sum or transfer was taken.

The award of initial payments is discretionary so, unlike the amount of an annual payment, there is no right of review about the amount of an initial payment payable to, or in respect of, a qualifying member of a qualifying pension scheme. 

However, the scheme manager can re-determine an initial payment if the amount being paid as calculated in accordance with the Regulations is incorrect. If you believe that the value of your initial payment is incorrect you may ask us to consider whether the value of that payment can be re-determined.

The term ‘expected core pension' was used in the original FAS scheme to indicate that FAS assistance did not include all the benefits that individual schemes may have offered (for example payment from the scheme’s normal retirement age rather than 65 and indexation).

This has changed following the extension to the FAS announced in December 2007. For some people the changes we made through the Regulations which came into force in June 2008 - payment at 90% of accrued pension from their scheme's normal retirement age - will get them to a position where the amount of FAS assistance they receive will be broadly comparable to the compensation paid by the Pension Protection Fund. Some other members will need to await for further legislation to deliver full implementation of other changes such as indexation in relation to post-‘97 service to get to a similar position.

No, we will have already taken the amount you receive from your pension scheme (your ‘actual’ pension) into account when determining your FAS award.

FAS payments are not means-tested so any income you have - other than from your scheme (such as from a personal or state pension, rental income, salary and so on) will not affect your payments.

We will take FAS payments into account when we work out many social security benefits (e.g. Pension Credit, Jobseekers Allowance, Income Support, Housing Benefit, Council Tax Benefit) and tax credits, in the same way as an occupational pension. FAS payments will not affect your State Pension. You should tell whichever office pays your benefits if you are receiving FAS payments.

No. The FAS is not a pension scheme, so it does not hold a fund in respect of each qualifying member which could be commuted into a lump sum instead of a regular pension. Any arrears of FAS payments are, however paid as a lump sum.

Yes, like an occupational pension, tax will be taken from your award before it is paid to you.

FAS payments normally commence at a schemes normal retirement age (the rules for survivors are different). Payments can be made to qualifying members before then if they have been diagnosed as terminally ill and unlikely to live longer than six months.

If you are a qualifying member of a qualifying scheme and would like further information on your potential eligibility please contact the FAS Operational Unit, who will ask you some simple questions and tell you the next steps.

If you are married or have a civil partner when you die then your widow, widower or surviving civil partner may continue to receive FAS payments. If you die after your scheme has completed wind-up then payments will be made at 50% of your entitlement (as long as you were receiving FAS payments in your own right and not as the survivor of a scheme member). This payment will not be affected if they remarry or form a new civil partnership.

When we are notified of your death we will contact your widow, widower or surviving civil partner to confirm their payment details (such as their address and bank account details).

You will receive a payment from FAS only if the qualifying member would have stood to receive a FAS payment.

Payments to survivors begin from the day after the death of the qualifying member, whichever is the later.

If you don’t agree with a FAS decision, you can ask for a review. This is when we look again at why we reached a particular decision and whether we did so correctly. If you still disagree with the outcome of a review, you can appeal to the Pension Protection Fund Ombudsman who will also consider FAS appeals. For more information visit www.pensions-ombudsman.org.uk.

FAS awards will be made direct into your bank, building society or Post Office card account on the same day each month.

The FAS aims to pay you from your normal retirement age. However, in practice, this will depend on when we receive the complete details of your entitlement from your scheme’s records. We will also need you to complete and return your personal details form before we can begin to make payments to you. Payments can be made to qualifying members before then if they are terminally ill and are unlikely to live longer than six months. Surviving husbands, wives and civil partners of a qualifying member can receive FAS payments whatever their age.

You will receive your first FAS payment within 7 working days of the payment being processed. This will be approximately 2 weeks after the FAS operational unit receive your completed FAS A2. This payment will include any arrears that are due.

Regular FAS awards will be made direct into your bank, building society or Post Office Card account on the same day each month.

We award FAS annual payments for life.

In his announcement in December 2007 the Secretary of State for Work and Pensions announced plans to increase FAS payments assistance relating to pension accrued from post-1997 service. FAS payments relating to benefits built up before this time will not increase each year.

We want to ensure that the assistance we provide is adequate but we have to balance this against the potential costs to the taxpayer. £26,000 is significantly above the average occupational pension of around £8,900.

The £26,000 upper limit helps to make sure that we can help as many people as possible with the amount of taxpayers’ money made available for the Financial Assistance Scheme.

FAS payments usually start from your scheme normal retirement age (with a lower limit of age 60 and an upper limit of age 65). Payments can be made to qualifying members before then if they are terminally ill. Information on these payments can be found on the FAS website. Additionally, the Secretary of State for Work and Pensions announced in December 2007 that early reduced payments for individuals who are unable to work due to ill heath will be included in the FAS. It is expected that change will be in place by late summer, subject to the Parliamentary process.

If you have already reached your normal retirement age or are older when we start to pay you FAS payments, we will make payments from the date you reached that age or from 14 May 2004, whichever is later. Wherever possible, we will include any payment that was due for in relation to a past period in your first payment from FAS.

Yes. If you have pension entitlements with different qualifying pension schemes then you can receive FAS payment top ups for each. This could mean that the total amount of FAS payment you receive is more than £26,000 in total. In the same way, a survivor could receive a FAS award in their own right as well as 50% of their deceased husband, wife or civil partner’s award.

To enable us to process your payment we will need your full account details i.e. the name the account is in, name of provider, account number and sort code.  In addition you need to provide the international account number for your account and the bic/swift code. You also need to let us know which currency you would like your payment to be made in. 

We will send you a P60 at the end of the tax year.

Your payment will only change when the tax office informs us of a change in your tax code.

If for any reason your money is not paid into your account on the 21st of each month please contact us on 0845 601 9941.

You need to inform us in writing of any relevant changes e.g. address, account changes, bereavement or marital status.

You can write to us at the following address:

The Financial Assistance Scheme
PO Box 702
York
YO32 9XR                                   

If we require verification of this information we will inform you.