On 17 December 2007, the DWP published Andrew Young’s final report on the Financial Assistance Scheme (FAS) review of scheme assets which began back in April last year. When the initial report was published in July, it prompted the Government to commit substantial extra funding to the FAS and to extend the assistance available to affected scheme members. The final report takes these changes into account, and makes a number of conclusions, such as:
- To provide a guaranteed benefit level, the best use of scheme assets would be for the Government to absorb the assets of affected schemes and making payments to FAS beneficiaries as they fall due
- Members of schemes wound up by solvent employers where a compromise agreement was put in place are in similar circumstances to those in schemes wound up by insolvent employers
As was the case with the publication of the initial version, the appearance of the final report prompted the Government to act yet again to improve FAS funding. On the day the Young report was released, Peter Hain, Secretary of State for Work and Pensions, announced in particular that FAS assistance will extend to 90% of a member’s accrued pension rather than the existing level of 80%. He also announced that assistance will be extended to members of schemes which wound up underfunded within the relevant time period where the employer is solvent but a compromise agreement is in place. These extensions will cost an extra £935 million, in addition to the £2 billion which the Government has already committed to FAS.
Peter Hain confirmed that the final details of the recent proposals will be confirmed early this year, when legislation will be drafted to give effect to the new package of measures.
The DWP has also published The Financial Assistance Scheme - Review of cost estimates report which describes revised estimates of the costs of current levels of FAS assistance as announced in the 2007 Budget and the data and modelling improvements from an extensive model-development project involving the DWP, GAD and Pricewaterhouse Coopers.
The Young Report on the FAS Review of Schemes Assets is available at: http://www.dwp.gov.uk/pensionsreform/pdfs/review-of-assets-dec-07.pdf