What is the Financial Assistance Scheme?
The Financial Assistance Scheme (FAS) offers financial help to some people who have lost out on their pension because:
- their scheme was under-funded when it started to wind up and
- either their employer has been unable to make up the shortfall because they are insolvent or no longer exist or a compromise agreement is in place between the employer and the scheme and whereby enforcing the debt against the employer would have forced the employer into insolvency.
Am I eligible for help from the FAS?
As an individual scheme member you will be eligible to get payments from the FAS if:
- you are a member of a qualifying pension scheme
and
- you satisfy certain conditions
How much will the FAS pay me?
We call the amount that the FAS pays to individual scheme members an award. The FAS will pay you an award of up to 90 percent of what you would have received if your pension scheme had been able to pay in full the pension you had accrued before you left the scheme, or before the scheme started to be wound up. We pay this award on top of any pension you receive from your scheme, up to a maximum of £26,000 a year. This means, for example, that if 90 percent of your ’accrued pension’ is £15,000 a year but you actually only get a pension of £10,000 a year, your FAS award will be £5,000 a year.
A FAS award is paid for life at a fixed rate (which does not increase). We will deduct tax from the award before making your payment. FAS is administered by the Department for Work and Pensions.
How does a scheme qualify for help from the FAS?
A pension scheme must successfully go through two stages to be eligible for help from the FAS:
- Notification
- Qualification.
1 Notification
Before we can decide whether a scheme is a qualifying pension scheme, we need some basic information about it. This is called notification.
You will find a list of schemes that have completed notification on the FAS website or you can contact the trustees of your scheme to check that they have carried out the notification stage.
For a pension scheme to be considered, it should have completed notification by 28th February 2006. We can accept notification after this time if there is good reason for us to do so.
2 Qualification
For an occupational pension scheme to be considered under the FAS rules, the scheme must:
- have completed the notification process (as described earlier);
- not be a money purchase scheme (also known as defined contribution scheme where a member’s benefits are based on the contributions paid by them and for them by their employer); and
- have begun the winding-up process between 1st January 1997 and 5th April 2005
Also, in most cases, the principal employer must have become Insolvent or entered into a compromise agreement which avoided insolvency.
You will also find a list of schemes that are qualifying pension schemes on the FAS Website or you can ask the trustees of your scheme whether your scheme qualifies.
How does an individual member qualify for help from the FAS?
To be eligible for a FAS award as an individual member, you must:
belong (or have belonged) to a qualifying pension scheme and been a member of that scheme immediately prior to the scheme commencing wind-up.
For those scheme members who have died but had met (or would have met had they lived) these conditions, their surviving husbands, wives or civil partners may also be eligible for an award.
Payments to scheme members are made from the later of:
- your scheme normal retirement age (with a lower age limit of 60 and an upper age limit of 65); or
- 14 May 2004 when the FAS was first announced.
Payments can be made earlier where a member is terminally ill.
Payments to survivors can begin at any age.
How the FAS works out your award
If you are eligible, we will work with your trustees of your scheme or – in the case of wound-up schemes – try to access your scheme records to work out your FAS award.
The FAS will top up any pension you receive to 90 per cent of your accrued pension benefits (up to a limit of £26,000).
Generally, your pension scheme must be nearly wound up or fully wound-up for us to work out your award in this way. If your scheme is still being wound up when you reach your normal retirement age then we may, if asked by the trustees of your scheme, top up any payment your scheme is making. These are called ‘initial payments’. It is also possible for the trustees of your scheme to make these initial payments themselves.
We will work out your final award when your scheme has been wound up. When we work out your final award we will take account of any initial payments we have already paid to you, and we may ask you to pay back money if we find you are not eligible for FAS or that you are eligible for a lesser amount than has already been paid to you.
I think I may be eligible – what do I have to do to get a FAS payment?
If you belong (or used to belong) to a pension scheme that is currently being wound up, it’s very likely that the trustees of your scheme have already been in touch with the FAS. Check the FAS website to see if your scheme has qualified or ask the trustees of your scheme. If your scheme has been wound up, check the FAS website to see whether somebody has already notified us. If not then contact us.
We will use pension scheme records to assess the eligibility of individual members for FAS payments. We will write to individuals to confirm:
- their personal details;
- whether or not they are eligible;
- how much FAS payment they’ve been awarded;
- how and when they’ll get it.
Failure to provide information
Scheme trustees or those administrating the scheme are required to provide the FAS Scheme Manager with the information needed to make a decision on scheme qualification and to determine the amount of FAS payable to eligible members within set timescales.
If the requested information is not provided the scheme manager may issue a notice to the person holding the information requiring it to be provided. Any person who fails to comply with such a notice may be guilty of an offence and liable to a fine. Further, if a person suppresses, conceals or destroys any document that they are, or are liable to be, required to produce under that notice, that person may be guilty of an offence, and liable to a fine or imprisonment or both.
Where there is a failure to provide information such cases may also be referred to the Pensions Regulator who may consider using their powers which include but are not limited to the issuing of an improvement notice. Failure to comply with an improvement notice carries a possible sanction of £5000 in the case of an individual and £50,000 in any other case. The Regulator also has the power to prohibit trustees, remove trustees from the Trustee Register and make public details of certain cases.
How we collect and use information
The information we collect about you and how we use it depends mainly on the reason for your business with us. But we may use it for any of the Department's purposes, which include
- social security benefits and allowances
- child support
- employment and training
- private pensions policy, and
- retirement planning.
We may get information from others to check the information you give to us and to improve our services. We may give information to other organisations as the law allows, for example to safeguard against crime.
To find out more about how we use information, visit our website www.dwp.gov.uk/privacy.asp or contact any of our offices.