28 March 2008 - FAS update – help for people who can’t work due to ill-health
People who have had to stop working due to ill health will soon be able to get early assistance from the Financial Assistance Scheme (FAS) announced Pensions Minister Mike O’Brien.
Draft regulations, published today for consultation, will mean people who have to stop working early because of poor health will be able to get payments from the FAS up to five years before their scheme’s normal retirement age.
Additionally, proposals in these regulations will speed up payments by including a requirement for trustees and other relevant people to provide information three months before a member’s normal scheme retirement age, or within 14 days of a request for that information where the member is unable to work due to ill-health.
These regulations will also remove the need for the FAS operational unit to wait until trustees apply for initial payments.
Mike O’Brien, Minister for Pensions Reform, said:
“People who have to stop working early because they are sick will be able to access their FAS money.
“Everybody is agreed FAS members should receive their payments as quickly as possible - so we have been continuing to work with trustees and other stakeholders to look at ways in which this process can be speeded up.
“The changes made by these regulations will mean we have the basic information to enable payments to be made faster."
Further measures will see up to 11,000 people in 162 schemes brought in to the FAS. These are schemes where the employer is still solvent but the scheme has wound-up under funded.
These measures, along with a further set of regulations to follow for consultation later this year, will ensure the settlement announced in December provides assistance broadly comparable with PPF compensation.
The Government has already consulted on changes to the FAS which will increase the amount paid to qualifying members to 90 per cent of their accrued pension from their scheme’s normal retirement age. Subject to timetabling of Parliamentary debates, the Department expect to be in a position to begin making increased payments from the end of May.
A reduced written consultation period of six weeks is considered appropriate for these draft regulations, balancing the importance of making these payments as quickly as possible and the need to ensure that there is adequate time for all involved to provide a meaningful response.
Notes to editors
- The consultation document is available on the Department’s website at http://www.dwp.gov.uk/consultations/2008/
- Scheme members can see more detail on the status of their schemes at http://www.dwp.gov.uk/other-specialists/financial-assistance-scheme/--notified-qualifying-and-non-qualifying/
- Consultation on the first set of draft regulations to extend the FAS to 90 per cent of accrued pension from normal scheme retirement age closed on 20 March 2008. The responses to that consultation are now being considered.
- The Government announced in December that the FAS would be extended so
that:
- All scheme members will be guaranteed 90 per cent of their accrued pension at the date their scheme began wind-up. This will be subject to a cap of £26,000, the value of which will be protected.
- Assistance payments derived from pension accrued post-1997 will be increased each year in payment in line with inflation.
- Assistance will be paid from each failed scheme’s normal retirement age, subject to a lower age limit of 60.
- People who are unable to work due to ill health will also be able to apply for early access to payments from age 60.
- Members will be able to draw a tax-free lump sum, up to their full lump sum entitlement, if their share of scheme funds allows.
- Help will be extended to members of schemes wound up by qualifying solvent employers.
- To bring about all these improvements, some amendments to the Pensions Bill 2007 will be required, and a further package of regulations will be published later this year.
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