Human Capital (Pensions) Consultation On Changes To The Financial Assistance Scheme

Consultation on changes to the Financial Assistance Scheme

(ìFASî)

The Department for Work and Pensions (ìDWPî) has released a

consultation document on proposed changes to the FAS, which are being

introduced to implement an extension announced in the Chancellor's recent

budget statement and which provide for other changes to the operation of the scheme.

The changes will ensure that around 125,000 individuals who lost

pensions when their schemes collapsed between 1 January 1997 and 5 April 2005

will receive at least 80% of their expected benefits, subject to an increased

cap of £26,000. The regulations also scrap the minimum payment rule which

currently prevents FAS payments being made to anyone entitled to less than £520

per year.

The extension will mean that the Government's total long-term cash

expenditure on the scheme will increase from £2.3 billion to £8 billion.

However, pensions action group campaigners continue to press for FAS

compensation to be increased to Pension Protection Fund levels. The consultation

document is available at the Department's website at: http://www.dwp.gov.uk/consultations/2007

New regulations place ban on trustees buying annuities in

relation to FAS

In more FAS news, the DWP has issued regulations which bar

trustees of collapsed pension schemes eligible for the FAS from buying

annuities on behalf of members for nine months from the effective date of the

regulations, except in specified circumstances. The Financial Assistance Scheme

(Halting Annuitisation) Regulations came into force on 26 September 2007.

Although trustees can still apply to the FAS Scheme Manager for permission to

purchase annuities, the nine-month embargo follows a recommendation by

government actuary Andrew Young in July that buying annuities is not necessarily

the best use of assets for such schemes.

The DWP has also issued guidance to trustees explaining the

implications of the new regulations. The regulations, guidance and related

press release are available at http://www.dwp.gov.uk/fas

DWP releases consultation on age discrimination and

flexible retirement

The DWP has published a consultation document, seeking views on

key issues that have been raised by the pensions industry since the

implementation of the pensions-related aspects of the age discrimination

legislation which came into force back in December 2006.

Since the implementation of the Age Regulations, a number of

issues continue to arise for employers, trustees and...