Press Release on FAS inadequacy

by Dr. Ros Altmann

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After telling the people who have lost their pensions that it did not want to offer ‘false hope’ the Government appears to have done just that with its £400million Financial Assistance Scheme. Some 65,000 people have lost their pensions, but £20million would buy a pension of just £6,000 a year for 130 people! A lifetime annuity of £6,000 a year, for a married man aged 63 and wife aged 60, costs around £153,300, calculated using annuity rates from the FSA website. £20m could, therefore, help just 130 people (£153,300 x 13o = £20m). So the whole Financial Assistance Scheme, if buying annuities, could only help 130 people each year. Alternatively, it could buy level annuities of £6,000 pension for 200 people, with no indexing.

Long-serving members worst affected have lost far more than £6,000 a year. £20m would probably not even replace half the lost pensions for these 130 people. ASW alone has hundreds of members, Dexion, Motherwell Bridge, Perivan, UEF, Albert Fisher, BUSM, Samuel Jones, IFI� the list goes on. And these are just the larger schemes.

The Government is claiming that it cannot announce how the FAS will work until it has all the data. But, without more money, there is not much point in even collecting the figures. This looks like merely an excuse to delay and placate the backbenchers until after the Election. It will take ages to get final figures and the cost of collecting the data is reducing the pensions further. If £20m will only give £6000 pension to 130 people, what use will the data be anyway? We already know that thousands of people are affected. Most long serving members have lost far more than £6000, so £20m a year could just give a tiny number of people a fraction of their pensions. The injustice will remain. Even though all these members were assured by Government that their contributions were completely safe and protected by law and they believed this.

Somehow the Treasury is not seeing things clearly. These people have been misled and received false assurances in the past. We need a higher amount of money for the FAS – a commitment of £75million a year for 40 years – and also to stop the schemes in wind-up from buying annuities. The Government should not be allowed to pretend it is helping, when it clearly is not. Confidence in pensions cannot be restored if these people’s pensions are not reinstated.

Baroness Hollis in the House of Lords Pensions Bill debate, said of the FAS:
‘The provision responds to our concern to offer decent and honourable support to those schemes�we want to implement a sensibly designed workable financial assistance scheme’ She also said ‘The Government are acting in good faith and seeking to deliver an effective scheme’. Unless more money is committed and the annuity purchases are stopped, these words are impossible to accept. How long do these people have to suffer before the injustice is corrected?