THE COMMENCEMENT OF THE FAS
by Dr Ros Altmann
2nd September 2005
The FAS started official operations on September 1st and is collecting more data on schemes. They claim they are acting quickly but I feel that the issue has rumbled on for far too long and the FAS will simply not be able to help enough people, or even give enough money to those it will help. The Government should be compensating everyone who has lost their pensions, properly and fully, rather than continually delaying payments, introducing exclusions and getting the trustees to fill in yet more forms, which all depletes the value of the schemes assets and leaves less for the members.
Obtaining data for schemes which have already completed winding up will be more difficult, since trustees may not have kept records after windup finished and, even if they have the records, who will pay for their time to send them to the DWP. Individual members of these schemes may need to write to the FAS direct and let them have their details.
It is hoped that some initial FAS payments will be made before year-end 2005, but this may only be the initial 60% figure for the terminally ill and those past state pension age, rather than the 80% originally announced.
Of course solvent employer schemes are still excluded and only members within 3 years of scheme pension age are eligible at all. This means less than 1 in 5 of those affected are likely to get any help from FAS and there is no word on anything for the rest!
I do hope that the Parliamentary Ombudsman will be able to help persuade the Government to rectify this dreadful social injustice properly and finally give you all the pensions you were told were safe and protected by law.
The following is a description of what will happen next.
September 1st is the day the FAS officially started operation. It is asking trustees to register scheme details again, this time formally. They are planning to ask trustees to provide information on the schemes by completing Form FAS A1. You can find a copy of this detailed 12 page form here
The aim of this exercise is for trustees to confirm the scheme details and for the FAS to then use this information to decide whether the scheme does, or does not, qualify for FAS eligibility. The speed with which the FAS can decide whether a scheme is a qualifying pension scheme will depend largely on the quality of information and evidence supplied by the trustees. Much of the information required is extremely detailed and requires a great deal of supporting paperwork. Some schemes may already have supplied everything and will be asked to confirm the data already held from the earlier data collection exercise (under signature) whilst others - which didn't provide answers to everything in the exercise - will be asked to provide a full set of information. There are regulatory requirements on the trustees to comply.
Once the FAS team has decided that a scheme does qualify, it will publish the name of the scheme on its website under the 'List of qualifying schemes'. If it decides that the scheme does not qualify, it will publish the scheme name on its website under the heading 'List of non-qualifying schemes'. At the moment, there is a list of 380 'potentially eligible' schemes, but none of these is confirmed as having qualified yet.
If the scheme is approved as qualifying for FAS, the trustees will then be asked to fill in another questionnaire, which will be used for providing the relevant data about individual members who may qualify for FAS money i.e. the names and details of people who were within 3 years of scheme pension age last May 2004. This will probably be done by completing an electronic template and the FAS has issued an indicative list of the sort of member data they need, as Annex C of their publication 'The Financial Assistance Scheme - An In Depth Guide for Trustees and Pension Professionals', This publication can be found here and you will see that the data requirements are quite extensive.
The FAS tell me they certainly intend to prioritise payments to the terminally ill and survivors, including widowers and - when appropriate - surviving civil partners.
The priority in the early months of FAS operations is to make sure the FAS team know about schemes, that they are notified within the 6 month period between 1st September and 1st April 2006 and that therefore members can be assured as to whether or not they belong to a qualifying scheme and might expect some help. Once they have done this, they say they can concentrate on collecting member data.
They confirmed to me that this does not mean they will delay asking for names of individuals who might be entitled until they have all scheme data in. They assure me that once they decide an individual scheme is a qualifying scheme they will start collecting member data for it and assess individual awards straightaway. I did ask why they could not ask trustees who were ready, to send the individual member data at the same time as the scheme data, to avoid any unnecessary delays, but the FAS said they 'don't think it would help - or advance our timetable considerably - to take in member data at the outset, although by referring to the FAS leaflets, schemes will be able to get a clear idea of what we'll be requesting and make preparations to get it to us as soon as it's requested.'
They say they will be asking for member data as soon as they have made decisions on whether a pension scheme qualifies. They also said 'Given our stated aim of making payments before the end of the year, we'll need to be requesting member details in September / October to allow us to make individual assessments and write out to members for payment details etc in good time.'
The timescales do - to a large extent - depend on the ability of trustees and administrators to get the FAS the information they need in a timely and usable fashion.
The FAS is simply not good enough! The FAS team is doing its best to operate efficiently, but its remit is flawed. There is just not enough money to provide satisfaction to members who have suffered so much. The FAS is only designed to help a fraction of the people affected and will only give them a fraction of the pensions which Government assured them were safe and protected by law. Many of these members have lost their entire life savings and are being treated appallingly by Government at the moment. It is Government's fault that they were denied an informed choice about how best to save for their futures. They did what they were told, trusted the system and now, when they have ended up suffering because they believed what they were told, the Government says 'hard luck' and offers to 'help' just some of them, but also attaches more and more conditions which have delayed the help. This is just not good enough. Full compensation is what needs to be paid here.
In the meantime, these are the FAS criteria:
- Only schemes whose sponsoring employer is insolvent
- The scheme must have started winding up between 1 January 1997 and February 2006
- Only members who were within three years of scheme pension age
- Only members of schemes which have finished winding up
- Members only receive assistance when they reach age 65 (even if scheme pension age was 60!)
- Members only receive 80% of 'core' pension
- No inflation linking will be paid
- The benefits will be capped at £12,000 a year, even if the pension lost is worth £20,000 a year or more
- Only 60% will be paid initially to members in most urgent need i.e. the terminally ill or those already past state pension age.
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