An estimated 140,000 victims of failed pension schemes are to be compensated; the announcement has been given a cautious welcome.
Work and Pensions Secretary Peter Hain made the announcement this week. The Financial Assistance Scheme (FAS) was designed to offer a safety net to people whose pension schemes collapsed between January 1997 and April 2005. The Pension Protection Fund (PPF) replaced it and covered members of pension schemes that have gone under since. It was significantly more generous than the FAS.
The Young Review aims to bring FAS workers more into line with workers covered by the PPF.
Consulting outfit Mercer has welcomed this week’s announcement but cautioned that deciding who would bear the cost of compensation required the “wisdom of Solomon”.
Deborah Cooper, principal in Mercer’s retirement business, said: “It is understandable that people expect the discrepancies between PPF and FAS to be ironed out. However, it’s vital that the government explains exactly who will bear the costs of the compensation and how much they must pay. This seems to require the Wisdom of Solomon.”
Final details of Hain’s proposals will be confirmed early in 2008, but amongst the details it is expected that payments will be backdated to May 2004 and that workers will be able to draw a lump sum or early pay out in case of illness.
