30 August 2007
Draft regulations have been published by the Department for Work
and Pensions (DWP) following the extension to the Financial
Assistance Scheme (FAS) announced in the last Budget.
The draft regulations propose to extend FAS payments to cover
members of defined benefit company pension schemes that began
winding up between 1 January 1997 and 5 April 2005, where a
compromise agreement is in place and where enforcing the debt
against the employer (i.e. the scheme was under funded) would have
forced the employer into insolvency.
In addition, the current cap on the amount of benefit the FAS
will pay, will more than double to £26,000 per annum and the
existing rule which currently prevents FAS payments to anyone who
would receive less than £520 per year will be scrapped.
These regulations will mean that around 125,000 people who lost
pensions when their schemes began winding up under funded will
receive at least 80% of their expected core pension, subject to a
cap.
The regulations are now subject to a six-week consultation
period and it is intended that they will come into force by the end
of the year.
