FAS moving forward

In December 2007 the Secretary of State for Work and Pensions announced changes to the FAS. The Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2009 introduced:

• Indexation of pension rights accrued after 1997;
• Maintaining the value of the cap on the total amount of scheme pension and assistance a member can be paid;
• Adjusting the amount of expected pension to reflect pension entitlement accrued to an earlier or later age than NRA (for instance where a pension scheme increased its normal retirement age from 60 to 65 for future accruals);
• Extending survivor assistance to surviving partners (currently only spouses and civil partners are entitled to survivor payments) where scheme rules provide for such payments, and
• Payments to certain dependent children.

These regulations also implement changes to FAS administrative procedures, including making the Board of the Pension Protection Fund (PPF) the FAS scheme manager.

The main changes are introduced by previous regulations are:

• We have changed the rate of financial help from the FAS from 80 percent to 90 percent of an eligible member’s accrued pension.
• The 90 percent rate will be paid from the normal retirement age set by the qualifying scheme’s rules (but not before the age of 60 or before 14 May 2004).
• People who are unable to work due to ill health are now eligible to receive payments from the FAS before their normal retirement age.
• Members of some final-salary schemes that were wound-up because they could not pay members’ benefits will be able to receive assistance payments even if their employer continues trading.
• Trustees must give us the information we need within three months of a member’s normal retirement age so that the FAS can work out the member’s assistance payments in good time.

The Government is currently consulting upon draft regulations which will include provisions for government to absorb the assets remaining in relevant FAS qualifying schemes. This will mean that the assistance structure will, for the first time, not be designed solely to top up payments made by the pension scheme or an annuity provider, but also to make the sole payment due to members.

• Consultation on the draft Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010 (679KB)

If you are already receiving FAS payments when each of these changes is introduced, the FAS Operations Unit will automatically review your payments. Further information can be found on the Pension Protection Fund’s FAS website.

• Pension Protection Fund FAS

Our FAS timeline shows the developments in the FAS since it was announced in 2004 and Legislation summarises relevant Regulations as they came into force.