06 June 2007
The Government is expected to face defeat in the House of Lords
today over 125,000 victims who lost their retirement savings when
their companies went bust.
The House of Lords is expected to back proposals to ensure that
fair compensation finally gets through to the thousands of people
affected. These are people who paid into final-salary schemes, only
to see the scheme collapse when their company collapsed - leaving
them with little or nothing in pension benefits.
The government made a concession in the Commons in 2005, which
extended the existing Financial Assistance Scheme (FAS) to cover
pension scheme members of funds that began winding up between 1
January 1997 and 5 April 2005.
Despite this extension, the FAS still only pays out 80 per cent
of people's lost pensions, and annual payments do not rise in line
with inflation.
It is proposed that the FAS pays out benefits on a par with the
Pension Protection Fund, for example, a payment of 90 per cent of
lost pension rights, linked to inflation. The Pension Protection
Fund was set up for workers whose companies with a final-salary
scheme collapsed after 5 April 2005.
