The Department of Works and Pensions (DWP) has proposed certain changes to save troubled Defined Benefit (DB) pensions that are presently “ineligible” to join the Pension Protection Fund (PPF) to become qualifying schemes to join the Financial Assistance Scheme (FAS).
Since certain employers do not meet the statutory definition of an ‘employer’, their pension schemes do not qualify for FAS.
The latest move by DWP comes after by Ros Altmann, the director-general of SAGA, lobbied for changes in present pension laws after the PPF refused to compensate 40 members of the George & Harding Group Pension Scheme.
The legal loophole meant the members of the G&H Group Pension Scheme would lose out on their savings after the parent company of G&H – Zejwa, were unable to pay them and the PPF lifeboat fund refused to bail the scheme out.
Ms. Altmann had warned at that time that members were not safe due to the loophole in the PPF regulation and the government must amend laws without delay.
In its consultation paper, the DWP has also proposed that FAS must the reflect the implementation of the order of pension sharing when a scheme winds up.
“The changes allow for the calculation of assistance payments to pension credit members – that is a person who has been given rights in the scheme as a consequence of a divorce – and the appropriate reduction in the amount of assistance paid to the member”, the DWP paper said.
Additionally, the consultation paper has also argued for removal of age limits for certain surviving dependents.
“These draft regulations contain an addition to the qualification provisions and some revisions to the payment provisions for the FAS. The draft regulations also contain textual changes which are intended to provide clarification in respect of the existing regulations”, the consultation paper said.
“The government has taken this opportunity to consolidate the existing 12 sets of FAS Regulations that govern FAS payments and the administration of the Scheme and to simplify the regulatory structure”, it added.
“This consultation is aimed at the pensions industry, and members of defined benefit pensions schemes who may be covered by the FAS”, the paper clarified.
The consultation closes on September 1, 2011.