Cross-party MPs have called for a review into the Financial Assistance Scheme, arguing that due to inflation erosion, people are now only getting 76 per cent of what they are guaranteed in their company pension when they should be getting 90 per cent.
An early day motion, signed by 36 MPs, has called on the government to review the extent to which the commitment to 90 per cent of expected pension entitlement has not been reached for those involved in the FAS, taking into account that some 3,000 recipients of FAS received small overpayments through inaccurate calculations by the Department for Work & Pensions, which they now seek to recover, “making these pensioners even more adversely affected”.
The motion calls on the FAS to waive the clawback.
The motion argues that all accrued rights “should be honoured” and that no changes should be made to pension rights that had already been built up.
According to the early day motion, the FAS scheme introduced by the previous Labour administration afforded 90 per cent of pension rights but due to inflation erosion and indexation being limited to post 1997 service only, now in real terms it is nearer to 76 per cent of what was a guaranteed 100 per cent company pension.
The motion said this means that “a pension promise made has not been kept”.
The FAS offers help to some people who have lost out on their pension because they were a member of an under-funded defined benefit scheme that started to wind-up between 1 January 1997 and 5 April 2005.
It also helps those whose schemes wound-up and did not have enough money to pay members’ benefits.
FAS also offers help to those whose employer cannot pay the shortfall because it is insolvent, no longer exists or no longer has to meet its commitment to pay its debt to the pension scheme. o
Those whose scheme started to wind up after 5 April 2005 but are ineligible for help from the Pension Protection Fund due to the employer becoming insolvent before this date will also be covered.
FAS is now administered by the Pension Protection Fund.