Delyn MP David Hanson has welcomed a pension settlement for 140,000 people who lost their savings when their employer-sponsored pension schemes collapsed.
The Financial Assistance Scheme offers financial help to people who lost out on their pensions because their occupational pension scheme was under funded when it started to wind-up and their employer was unable to make up the shortfall because it was insolvent or no longer exists.
Under the terms of the recent announcement, the Financial Assistance Scheme (FAS) will 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, protected against inflation.
· Pension accruals after 1997 will be protected against 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.
· Widows and surviving civil partners will continue to be eligible for half of their spouse or civil partner’s entitlement.
· Help will be extended to members of schemes wound up by solvent employers.
The announcement follows the final report of the Young Review which looked at ways of generating additional value from the failed pension schemes.
David Hanson said:
“I am delighted that this Government has taken action to protect those whose occupational pensions are put at risk when their employer goes bust.
“This settlement has been widely welcomed and with the Pensions Protection Fund and the Financial Assistance Scheme in place people have far more security in retirement.
“This is part of a wider programme encouraging greater confidence in pensions, including changes in the 2007 Pensions Act, recent reforms to the State Pension system to tackle pensioner poverty, our deregulation package, and the creation of Personal Accounts. Taken together these will ensure a fair, sustainable and generous pension system for today’s and tomorrow’s pensioners.”