Victory – A decent FAS settlement at last!
by Dr. Ros Altmann
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I just thought I would write to give you my thoughts on the tremendous announcement from DWP on Monday. At last people in the Financial Assistance Scheme (FAS) will be treated as if they had qualified for the Pension Protection Fund (PPF). This is not perfect, of course, and I do believe they deserve 100% – as was paid to Northern Rock savers and as the Parliamentary Ombudsman recommended – but it is a very good compromise and should allow the victims to get on with their lives, rather than fighting on for more. One also has to know when to stop!
Of course, if payments do not start in the next few months and the DWP drags its heels on this, then we will come back with a vengeance, but for now I am willing to give the Government the benefit of the doubt. We are not yet dropping the legal action, but I truly believe that the DWP will do its utmost to sort this out, not string it out any longer.
I would really like to take this opportunity to thank you so much for all your support in these past 5 years. I did sometimes doubt we would ever reach this point, but am so pleased that we have finally managed to force the Treasury and Prime Minister to agree to let the DWP sort this scandal out.
Thank you again for all your coverage and encouragement.
PRESS RELEASE 20th December 2007
FINANCIAL ASSSISTANCE SCHEME – AT LAST A DECENT SETTLEMENT – BUT WE NEED TO GET MONEY THROUGH QUICKLY
The FAS improvements announced this week are hugely welcome – albeit of course long overdue. At last, the DWP has recognized that it cannot get away with spin. After so many years of false promises and fighting, there really has been a change of mood at the DWP. Rather than denying responsibility for the problem, Peter Hain and Mike O’Brien have finally taken responsibility for sorting it out. The officials at the DWP were also very helpful in trying to reach this deal, despite difficulties with the Treasury they have pushed it through. Andrew Young’s excellent Review helped to show how this could be done.
So what’s happened? Basically, the Treasury and Prime Minister have finally allowed the DWP to sort out the worst pension scandal in UK history. The announcement means the FAS at last covers everyone whose scheme failed between 1997 and 2005 and they will get pretty much the same as the PPF level of benefits, which makes it at least fair in a political and policy sense. The previous FAS rules were far less generous and totally excluded many thousands of victims. There are still a few issues to sort out about mechanics and logistics, but we are almost there. I do think it is a cause for real celebration.
Quite frankly, I really did not know if we would manage to achieve this. Let’s face the facts. After battling for well over 5 years, this is the first FAS announcement that seems like a proper deal, not just spin. It may not be everything they deserve, but it is an offer on the table now and one that I feel is at least fair in most respects.
We could, of course, have gone on fighting for more, going through the Courts, having more vigils and demonstrations around the country and continually begging the media for more coverage but my honest view is that now is the time to call a halt. One has to know when to stop. Fighting on for more years and watching more people die while waiting for justice seems unwise.
The DWP has promised to hurry through regulations and legislation to enable this to happen quickly – I think it could take a few months, but at least the victims know it is coming. The DWP would also like to ensure that there is no need for long consultation on these terms, so we need the Opposition parties to agree to this. I hope that won’t be a problem, because having to stick to the statutory 12-week consultation period will add a huge delay.
It has been a privilege to meet so many good people and I pay tribute to their bravery and tenacity in the face of such strong obstacles. I think this success shows that honesty, integrity and perseverance – with strong backing from the media – can still overcome apparently insurmountable odds to achieve justice.
Wishing everyone a very good Christmas and a happy New Year.
Dr. Ros Altmann
1. None of the Opposition parties called for more than PPF, so achieving 100% would have been almost impossible. The ECJ specifically said that the Government was not obliged to compensate 100%.
2. Nevertheless, the FAS improvements are hugely significant:
a. The FAS will now include members of ALL solvent employer schemes
b. FAS payments will start from the members’ scheme pension age of 60 or above. Anyone who has already past scheme pension age will have their payments backdated to May 2004, so they will get a lump sum of money for arrears. Unfortunately, people who should have retired before 2004 will not receive backdating to their original retirement date.
c. FAS payments will rise to 90% of pension as per the PPF (and the concept of ‘core’
pension is being ditched I believe)
d. There will be a tax free lump sum
e. There will be a cap of £26,000 and this amount will be inflation-protected
f. There will be inflation linking up to 2.5% for all post -1997 accruals
g. There will only be allowance for ill-health early retirement from age 60
(this is the one point that I find really difficult and will hope to get
changed, but the Treasury would not agree to allowing ill-health early
retirement before age 60, even with people applying on a discretionary
h. Scheme assets will no longer be used to buy annuities. The assets
will be taken in by the Government (£1.7bn going to the Treasury!) but the
Government will underwrite the FAS payments, giving a proper
underpin to the scheme.
3. The one point that needs work is the ill-health provision for people under 60. The DWP have promised to work to find a way to sort this out in the new year.