Azara Blog: Government backs down over failed pension schemes

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Date published: 2007/12/17

The BBC says:

Campaigners have welcomed a £2.9bn rescue package for 140,000 workers who lost their pensions when their companies went bust.

Work and Pensions Secretary Peter Hain has set out plans to restore 90% of the value of their pensions.

That brings them in line with other workers covered by the Pension Protection Fund (PPF).
The government says the settlement will benefit 130,000 workers already eligible for the Financial Assistance Scheme (FAS).

It will also cover another 11,000 workers who are members of failed pension schemes belonging to solvent employers.

The latter group had been excluded from the FAS.

Under the proposals, workers will now be entitled to 90% of their expected pension, and not the narrower "core pension" protected under the original terms of the FAS.

Payments will increase in line with inflation, and will be paid from each failed scheme's normal retirement age.
The Financial Assistance Scheme (FAS) was designed to offer a safety net to people whose pension schemes collapsed between January 1997 and April 2005.

The Pension Protection Fund (PPF) covers members of pension schemes that have gone under since then.

Despite various concessions since its inception, the FAS was significantly less generous than the PPF.

It's about time. But it doesn't address the fundamental underlying issue. Companies were allowed to, and still can, arbitrarily steal pensioners' money. Government should not be the one picking up the bill, instead the companies should not be allowed to steal this money in the first place.

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