Pension help 'leaves out 50,000'

By Paul Lewis
BBC Radio 4's Money Box

An estimated 65,000 people have been hit by pension wind-ups

At least 50,000 people may have to wait 18 months to find out if they will get government help for those whose pension scheme cannot pay the money promised.

The Financial Assistance Scheme was announced last May for people whose pension scheme was wound-up and who may get little or no pension as a result.

The government has estimated there are 65,000 people in this position.

But BBC Radio 4's Money Box has been told that the FAS will initially help less than a quarter of that number.

Pensions Minister Malcolm Wicks said: "We wanted to focus early attention on those groups of workers who were coming up to retirement, indeed some have already retired, so people three years away from pension scheme retirement age.

"We think we are probably talking about 15,000 people."

'Important omission'

The cut-off date is 14 May, 2004. Anyone who had reached the pension age specified by their scheme or was within three years of it on that day will get 80% of what the government calls their "core pension benefits".

But that will exclude any rises in future to allow for inflation.

"There will be a widow's entitlement but we do not think we are going to be able to promise an index-link against inflation for their pension in their future," Mr Wicks said.

The government told us our pensions were safe, protected by law and guaranteed Andrew Parr, Pensions Action Group

Andrew Parr from Pensions Action Group - who himself faces the loss of much of the £15,000 pension he was promised - told the programme that it was very disappointing.

"It is a very important omission which means you will get progressively poorer as you get older," he said.

"The government told us our pensions were safe, protected by law and guaranteed, and we expect those pensions."

Period of uncertainty

Mr Wicks also said it could be many months before the 50,000 younger victims will find out what they may get, if anything.

"We are not yet in a position to give that detail. There will be later announcements and we have said the Financial Assistance Scheme itself will be reviewed after three years.

"We announced to parliament that in the Spending Review we will be looking at the funding of the FAS.

"I cannot be precise about the timing but they are going to have to wait a little bit."

I cannot be precise about the timing but they are going to have to wait a little bit Pensions Minister Malcolm Wicks

The next government Spending Review is in summer 2006 and Mr Parr thinks that is too long to wait.

"Eighteen months seems a long while not to know what pension you are going to get," he said, and continued:

"One presumes that the government would not dare cut them out completely. But people do not know.

"We are going to continue our campaign. Nobody thinks this is the end of the story by a long way."

Mr Wicks also said that those who are going to be paid would have to wait some time before they got their money:

"The unit administering this scheme will be up and running in the spring and I hope we can make the first payments as soon as possible thereafter."

The FAS payments will be made by the Department for Work and Pensions as a top-up to the pension paid by the company scheme.

The payments are restricted to those whose pension fund was wound up between 1 January, 1997, and 5 April, 2005.

Schemes which fail after that will be helped by the new and separate Pension Protection Fund.

BBC Radio 4's Money Box will be broadcast on Saturday, 26 February at 1204 GMT.

The programme will be repeated on Sunday, 27 February at 2102 GMT.