29 August 2007 - Financial Assistance Scheme (miscellaneous amendments) regulations 2007
Draft regulations for the extension of the Financial Assistance Scheme (FAS) have been published by the DWP.
The regulations will bring about the extension announced in the Budget on March 21, so that around 125,000 people who lost pensions when their schemes began winding up under funded will receive at least 80 per cent of their expected core pension, subject to a cap.
The current cap will more than double to £26,000 per annum. The regulations also scrap the de minimis rule which currently prevents FAS payments to anyone who would receive less than £520 per year.
The regulations also make provision to extend FAS payments to cover members of pension schemes that began winding up between January 1, 1997, and April 5, 2005, where a compromise agreement is in place and where enforcing the debt against the employer would have forced the employer into insolvency.
The regulations are now subject to a six-week consultation. It is intended that they will come into force by the end of the year.
Notes to Editors
- Copies of the regulations and consultation document can be found at http://www.dwp.gov.uk/consultations/2007/
- The Pensions Act 2007 has already raised the level of FAS initial payments - for schemes which are still winding up - to 80 per cent of core expected pension, in line with payments to members of schemes which have completed that process.
- The DWP will also shortly be bringing forward regulations under the Pensions Act 2007 regarding annuitisation by FAS-qualifying schemes. This is to support the work of the Young Review which is looking at how better use can be made of the assets in the schemes. The Government has said it will match any additional funding generated by the review to increase FAS assistance further towards 90 per cent of core expected pension.
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