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Last Updated: Wednesday, 21 March 2007, 17:40 GMT
Pension victims offered more cash
People protesting about their lost pensions.
Pensioners protest in London about their lost pensions
The Chancellor has announced a big increase in help for people who lost their pensions when their employers went bust before 2005.

The amount of money being pumped into the Financial Assistance Scheme (FAS) will rise from 2bn to 8bn.

The Chancellor said the money would be available to help all of the 125,000 people who have been affected.

Members of the affected pension schemes will now get 80% of the "core" pension entitlements they had accrued.

"We have listened to the arguments of campaigners, and we have complied with the Order in the recent High Court judgment that we reconsider the Ombudsman's recommendation that we compensate affected scheme members," said Work and Pensions Secretary John Hutton.

"As a result we will greatly extend the scheme from helping 45,000 people now to helping all 125,000 people who lost out when their schemes wound up under-funded between January 1997 and April 2005."

High Court

The announcement comes in the wake of a highly embarrassing High Court decision, which ruled that last year the government should not have rejected some of the findings of Parliamentary Ombudsman Ann Abraham.

It still falls short of the compensation required
Brendan Barber, TUC

She said the government had been guilty of maladministration, and should find ways to compensate more fully those who had lost their pensions.

The government announced last week that it would appeal against the High Court judgement.

But the decision in this budget is a step towards meeting the demands of pensioners who have been protesting for several years that they had been left in the lurch by the government and that the FAS was inadequate.

"This is a significant boost for those who lost their pensions in company collapses before the Pensions Protection Fund was established," said TUC general secretary Brendan Barber.

"But it still falls short of the compensation required to ensure that victims enjoy the 90% level of support from the Financial Assistance Scheme offered to members of schemes covered by the Pensions Protection Fund."

Compensation

The FAS was set up to provide some compensation for people who had lost all or part of their pension entitlements.

Today's announcement does nothing for most of those who are struggling without their pensions today
Ros Altmann, Pensions Action Group

It covers those who lost money when some 660 companies collapsed, or closed down their insolvent pension schemes, between 1997 and 2005.

The government said an additional 85,000 people would now come within its scope, and the upper limit on how much they could receive would be raised to 26,000.

"Brown's plan to extend the FAS to 8 billion is really welcome and should at least go some way to help the 125,000 workers who so unfairly lost their pensions," said Gordon Lishman of the charity Age Concern.

Funding for the FAS, which is currently paying compensation to just 1,000 people, was increased last May from just 400m to 2.3bn.

But Ros Altmann of the Pensions Action Group accused the government of still failing to provide proper compensation.

"Today's announcement does nothing for most of those who are struggling without their pensions today," she said.

"There are already 10,000 people past pension age who should be receiving money from the FAS, yet only about 900 have had any money at all.

"These 10,000 are the ones who need help, but today's announcement does nothing for most of them."


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