The Department for Work and Pensions (“DWP”) has released a consultation document on proposed changes to the FAS, which are being introduced to implement an extension announced in the Chancellor's recent budget statement and which provide for other changes to the operation of the scheme.
The changes will ensure that around 125,000 individuals who lost pensions when their schemes collapsed between 1 January 1997 and 5 April 2005 will receive at least 80% of their expected benefits, subject to an increased cap of £26,000. The regulations also scrap the minimum payment rule which currently prevents FAS payments being made to anyone entitled to less than £520 per year.
The extension will mean that the Government’s total long-term cash expenditure on the scheme will increase from £2.3 billion to £8 billion. However, pensions action group campaigners continue to press for FAS compensation to be increased to Pension Protection Fund levels. The consultation document is available at the Department’s website at: http://www.dwp.gov.uk/consultations/2007