Peter Hain, Secretary of State for Work and Pensions, has announced a new package to help up to 140,000 people who lost savings when their employer-sponsored pension schemes collapsed.
The announcement was made alongside the publication of the Young Review, which has been commissioned by the government to look at ways of generating additional value from the failed pension schemes.
The report by Andrew Young, government directing actuary, said that if the residual assets in failed pension schemes totaling more than £1.7bn were brought into government control it would be possible, with an additional top-up by the government, to meet the demands made by trade unions and campaigners for the workers who lost their pensions.
Hain said: “I’m delighted that we are able to announce a settlement that will provide justice for the 140,000 people affected when their schemes were wound up, including members of schemes where the company is still solvent. This builds on the substantial steps we’ve already taken to put right the unfairness they experienced.
“We believe this represents a just and final settlement – bringing the total commitment to £12.5bn in cash terms or £2.9bn in net present value terms. Although the government has been criticised over this matter, there are huge amounts and it is right that we have been able to maximise the return from residual assets in the schemes which collapsed so that the public purse has had value for money too.”
The Financial Assistance Scheme will be extended so that – among other measures – all scheme members will be guaranteed 90% of their accrued pension at the date the scheme began wind-up, which will be subject to a cap of £26,000, the value of which will be protected.
Also, assistance will be paid from each failed scheme’s normal retirement age, subject to a lower age limit of 60 years. People who are unable to work due to ill health will also be able to apply for early access to payments from age 60 years. Members will be able to draw a tax-free lump sum, up to their full sum entitlement, if their share of scheme funds allows and help will be extended to members of schemes wound up by qualifying solvent employers.