Release commenting on FAS 2006 annual report - Ros Altmann

    Ros is a leading authority on later life issues, including pensions,
    social care and retirement policy. Numerous major awards have recognised
    her work to demystify finance and make pensions work better for people.
    She was the UK Pensions Minister from 2015 – 16 and is a member
    of the House of Lords where she sits as Baroness Altmann of Tottenham.

  • Ros Altmann

    Ros Altmann

    Release commenting on FAS 2006 annual report

    Release commenting on FAS 2006 annual report

    Comments on FAS annual report

    by Dr. Ros Altmann

    (All material on this page is subject to copyright and must not be reproduced without the author’s permission.)

    The Financial Assistance Scheme has just released its second Annual Report.  This deeply unimpressive document indicates just how little effort has really been made to actually sort out the problems faced every day by members living (and sadly, in some cases dying) without the pensions which the Government assured them had been properly protected. 

    I urge the new Prime Minister to demonstrate his determination to lead a Government of ‘change’ by immediately agreeing to change the FAS, in line with the amendments already passed in the House of Lords and which will come back to the Commons soon for the Pensions Bill third reading. 

    In 2005 the Government said the objective of the FAS was to assist those worst affected by the loss of their pension and ensure those who need help most urgently actually receive it.  Against this background, it seems startling that there is no mention at all in the FAS annual report of the fact that 90% of those who are already past their pension age are not receiving any money at all from the FAS.   Only just over 1,000 of the 10,000 pensioner victims have had any money at all.  There is also no mention of the number of people who have already died without receiving their payments.   The Government just seems not to have taken this situation seriously.

    Indeed, this slim report (which does not even appear to have any page numbers) has even dumbed down the original objective of the FAS to being merely ‘to provide assistance to affected scheme members’.  That seems to suggest that as long as a few fortunate people are receiving some payment, the FAS objectives are being met!  Surely Gordon Brown should now take charge of this situation and end this scandal.

    Let us not forget that the Parliamentary Ombudsman, PASC, High Court and ECJ have all ruled that the Government itself is at fault here and is responsible for failing to protect these people’s pensions.  They should be receiving proper compensation, not just a bit of assistance.

    In fact the £4m spent last year on running the FAS (£1.5m salaries for 61 staff plus £2.5m on IT and other administration) is more than the amount paid to all the 10,000 victims currently struggling without their pensions!!

    Yet all those who are in the PPF,  whose schemes started winding up since April 2005, are already being paid, which shows that the problem must lie with the way the FAS is designed, not with the scheme trustees or data.  The PPF is set up properly to ensure trustees can pay members as soon as they reach pension age, even before the PPF takes over.  If the FAS allowed trustees of its schemes to pay PPF level benefits as soon as scheme pension age was reached then all those who lost their pensions between 1997 and 2005 could already be receiving proper compensation and this scandal could be over. 

    This is what the amendments already passed in the House of Lords have called for, but the Government is resisting.  As long as the Government resists such a solution, it will not end this stain on UK pensions policy.

    I call on Gordon Brown to show courage and take charge of this situation.  He has an opportunity to actually show that he means what he says about a Government of change.  He has promised to move away from ‘spin’.  If he truly wants to listen to the people he will now agree to compensate properly those who did what society asked of them, who have had all the independent verdicts in their favour and who are in desperate need.  If he really wants to show respect for our Parliamentary democracy, then he needs to agree to the extra £20m a year cost of properly compensating all those who have lost out, allow them to have the money immediately and end their suffering right now. 

    No more reviews, no more delays, just promise proper and fair compensation immediately.  Is he strong enough to practice what he preaches?

    For further information please contact Dr. Ros Altmann on 07799 404747


    Notes for editors:

    1. The Financial Assistance Scheme was announced in May 2004 and began in 2005.  It has only been designed to offer ‘assistance’ rather than ‘compensation’, despite the verdicts of the Parliamentary Ombudsman, Parliamentary Public Administration Select Committee, UK High Court and European Court of Justice which all found that the Government failed to properly protect pensions, despite promising to do so.
    2. The FAS is based more on ‘spin’ than substance.  So far, the Government says that members will be receiving 80% of their expected pensions, but that is not true. 
    3. The FAS annual report just repeats the ‘spin’ about people getting 80% of their ‘core’ pension.  It fails to explain just how little this really is relative to what people were promised and also hardly mentions that the ‘initial’ FAS payments are only 60% not 80%. 
    4. What is the ‘core’ pension?  The FAS ‘core pension’ takes the members’ actual promised pension and
    • Deducts all the inflation linking
    • Deducts some of the revaluation that would normally apply
    • Takes away some of the widow’s benefit
    • Takes away the tax free lump sum
    • Takes away all children’s benefit
    • Takes away the ill-health benefits
    • Removes the scheme pension age and replaces it with age 65 (for men and women alike)
    • And this is what it calls the ‘core’ pension!
    • It then takes 60% or 80% of that figure and finally it deducts 22% tax at source
    • That is the amount the victims finally receive.  Clearly, this is NOT 60% or 80% of their expected pension.

    The House of Lords recently defeated the Government and passed amendments to the Pensions Bill calling for the FAS to pay at least as much as is paid by the Pension Protection Fund, to ensure that the scheme trustees can pay, rather than waiting for the FAS bureaucracy and data gathering to be finalized and to establish an urgent ‘Lifeboat’ scheme to rescue those who have lost out.  These amendments come back to the Commons to be voted on in the Third Reading of the Pensions Bill, probably in July.  If enough Labour MPs support these amendments, they will become law.

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