Timeline of events
This page sets out the key events in the development of the Financial Assistance Scheme.
||Plans announced for a Financial Assistance Scheme (FAS) to assist those who had lost, or who stood to lose, significant amounts as a result of their pension scheme winding-up under funded with an insolvent employer.
||Royal Assent of the Pensions Act 2004. Section 286 of the Act provides for the setting up and operation of the FAS and comes into force on 1 June 2005.
||The Pensions Minister at the time stated that under funded pension schemes that started winding-up between 1 January 1997 and 5 April 2005 will be potentially eligible for help from the FAS.
- Indicative list of potentially eligible schemes published.
- Assistance of a level broadly equivalent to 80% of expected core pension provided to qualifying members who were within three years of their scheme's normal retirement age, or above, on 14 May 2004.
- Definition of insolvency confirmed.
- FAS benefit cap of £12,000 announced.
||Majority of FAS regulations come into force, establishing the scheme:
FAS Operational Unit opens for business.
- Schemes must have started to wind-up between 1 January 1997 and 5 April 2005 and meet certain other qualifying criteria.
- Members of qualifying schemes who were within 15 years of their normal retirement age on or before 14 May 2004 may qualify for assistance payments, tapered depending on proximity of the member to normal retirement age.
- Qualifying members generally entitled to payments at age 65 (though early access to payments is possible for the terminally ill).
- Eligible survivors of qualifying members who have died may also qualify for payments (at a lower level) regardless of their age.
- FAS payments top up any pensions being paid by the scheme during its winding-up or at wind-up to a specified proportion of members' "expected core pension".
- Payments are subject to a cap (£12,000 a year) and to a de minimis amount (£520 a year).
- In general, payments made whilst pension schemes are winding-up ("initial payments") are paid at a lower rate than final payments ("annual payments"), at up to 60 per cent of expected core pensions.
||Financial Assistance Scheme (Modifications and Miscellaneous Amendments) Regulations 2005:
- Modify and apply certain provisions of Part 2 of the Pensions Act 2004 to regulations governing appeals in relation to the FAS.
- Also amendments to the ways payments are to be made to survivors of qualifying members.
||The Financial Assistance Scheme (Appeals) Regulations 2005:
- Provision for the Ombudsman for the Board of the Pension Protection Fund, or a deputy, to investigate and determine appeals against review decisions made by the scheme manager of FAS.
||The first payments are made in line with the commitment to make them by the end of the year.
||End of the scheme notification period (although this can be extended at the Scheme Manager's discretion).
||The Government announces its intention to extend eligibility to the FAS, to include people within 15 years of their occupational pension scheme's normal retirement age.
||The Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2006 came into force and included:
- Cut-off date of 28 February 2007 by which an insolvency event must occur if a pension scheme is to be considered a qualifying scheme within FAS.
- Provision for employers in relation to schemes that had not formally had an insolvency event to be treated as having had an insolvency event for the purposes of FAS Regulations.
- Also for employers' overseas insolvency events that the scheme manager is satisfied substantially corresponds to a qualifying insolvency event.
- Extended eligibility for assistance to members who were within 15 years of their normal retirement age for their scheme at 14 May 2004.
- Clarified that survivors of deceased qualifying members will be considered for payment if the qualifying member was entitled to a FAS payment or would have been entitled to a payment had they lived.
||First payments issued to newly qualified survivors.
||Cut-off date for insolvency events was due to be applied. Extended to 31 August 2007.
||Extension to the FAS and an Assets Review announced in the Budget:
- Removal of tapered assistance
- Level of annual payments set at no less than 80 per cent of expected core pensions subject to any cap (and any assets allocated to members by their scheme).
- This level of assistance is for all qualifying members, regardless of age.
- Provision setting initial payments - paid whilst pension schemes are winding-up - at a level of 80 per cent.
- Inclusion of compromise agreement schemes.
||The FAS Review of Scheme Assets is set up to consider whether an alternative treatment of the residual funds in affected pension schemes could supplement the funding already committed by Government for the FAS and provide increased levels of assistance for members.
||The Financial Assistance Scheme (Halting Annuitisation) Regulations 2007:
- Prohibited trustees of FAS qualifying schemes from purchasing or agreeing to purchase annuities on behalf of FAS qualifying members (subject to exceptions, for example if trustees had already entered into a binding commitment before the regulations came into force on 26 September 2007, or the Secretary of State for the DWP approved the purchase or agreement).
||The Asset Review final report is published, with a key recommendation:
A package of future extensions to the FAS was announced. Key changes were:
- On the assumption that the Government would guarantee assistance levels, the Government should take in the assets and pay the amounts due to all FAS beneficiaries as they fall due.
Full details in the statement given by the Rt Hon Peter Hain MP (56KB) the former Secretary of State for Work and Pensions.
- Payments topped up to 90 per cent.
- Payable from normal retirement age.
- Ill health payments.
- Inclusion of some solvent employers.
||Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2007:
- All members of qualifying schemes had their FAS payments increased to 80 per cent of their expected pension.
- Cap increased from £12,000 to £26,000 per annum
||Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2008:
- Eligible members' scheme benefits will be topped up to 90% of their expected pension (subject to the cap of £26,000 per annum).
- This is payable from normal retirement age (subject to a lower age limit of 60 and an upper age limit of 65).
||The Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2008 continue the programme to implement the improvements announced in December 2007. In particular:
- Early access to reduced FAS payments on the grounds of ill health.
- Inclusion of certain schemes where the employer is still trading and solvent.
- Remove the requirement for trustees to apply for initial payments on behalf of members
- Requirement for trustees to provide data to FAS three months before the member's normal retirement age.
- Remove the option for FAS qualifying members to be reinstated into the State Additional Pension (deemed buy back).
- Provide powers for the Pension Protection Fund to manage qualifying schemes through wind-up.
- Provide FAS with powers to direct trustees to undertake particular actions to protect remaining assets within qualifying FAS schemes.
The Financial Assistance Scheme (Amendment) Regulations 2008 provide an exception to one of the qualifying conditions for the Financial Assistance Scheme (FAS), that schemes must have commenced winding up by 5 April 2005.
The Regulations enable certain occupational pension schemes which currently cannot qualify for the Financial Assistance Scheme, or the Pension Protection Fund to be qualifying pension schemes for the Financial Assistance Scheme.
The Financial Assistance Scheme and Incapacity Benefit (Miscellaneous Amendments) Regulations 2009 allow for early unreduced payment of assistance for qualifying members who are aged 55 or over, who are not terminally ill, but have a significantly shortened life expectancy. These payments are called severe ill-health payments.
The Regulations also provide for:
- An application to be made for a past period before the Regulations came into force;
- A transitional period of one year from the 27 March 2009 in which people may make a claim for a past period;
- A survivor or relevant representative to make an application in respect of a member who may have benefited from the provisions had they not died.
- FAS payments to be treated as pension payments for Incapacity Benefit purposes.
The Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2009 provided for:
- 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 normal retirement age (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 Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2010 provide for:
- Transfer of pension scheme assets to Government
- Payments to those with over 90 per cent entitlement whose assets transfer