Just days after the revelation that a fund intended to help thousands of pensioners facing poverty had paid just 113 people, the UK government has unveiled plans to overhaul the Financial Assistance Scheme (FAS).
The FAS was established to help individuals facing a poverty-stricken retirement following the collapse of their companies, leaving an under-funded pension scheme. The FAS was originally intended to target those former employees whose schemes went bust between January 1997 and April 2005, and who were within three years of their retirement at the time their firm became insolvent.
Now the pensions minister James Purnell has announced that the government will extend this qualifying timeframe from three to 15 years. This should help a further 25,000 affected people, who were within 15 years of retiring as of May 2004.
For those closest to retiring at the time of their employer’s demise, the government will reimburse 80% of the individual’s pension rights, up to a value of GBP12,000 per year.
We understand how difficult it has been for people who lost pensions as a result of their employer going bust. That is why we are extending the FAS with a commitment of GBP2 billion over its lifetime, the minister said.