Government shamed by Lords backing for private pensioners

By Jayne Warren - 12/06/2007

Pensions campaigners who were driven to stripping naked last week outside the Houses of Parliament in a desperate attempt to draw attention to their plight, have been buoyed by  House of Lords introducing an amendment to the Pensions Bill for higher payouts from the Financial Assistance Scheme (FAS).

The FAS was set up to compensate people who lost out when their pension schemes collapsed between 1997 and 2005, and, under the Lords' plans for a "lifeboat fund" for the FAS, its compensation would be increased to match the more recent Pension Protection Fund (PPF).

Dr Ros Altmann, an independent consultant and pension campaigner, pointed out that the FAS has only paid out around £4m to just over 1,000 of the victims - despite costing £10m to administer and leaving around 9,000 other victims already over the age of 65 with nothing. She said: “The FAS is not working. Instead of allowing the trustees of these schemes to pay as soon as people reach pension age the FAS demands reams of data and lengthy checks before paying out any money, so members are left red tape rather than money.

“The amendments voted on by the House of Lords would provide a fair and final resolution of this scandal, so the victims can get on with their lives and we can get on with trying to restore some confidence to our pension system.”

With cross-party support in the Lords, the amendments would see the amalgamation of the FAS into the PPF so benefits would be paid at the same level of 90%. They would also expand the remit of the FAS to cover employees whose pension schemes have failed despite their employer remaining solvent; and would establish the pension protection lifeboat fund using unclaimed assets appropriated through a new Unclaimed Assets recovery Agency.

Ahead of the Lords debate, Liberal Democrat pensions spokesman Lord Oakeshott said: "The Government must meet its obligations to these robbed pensioners. They have not taken a blind bit of notice of the High Court, the European Court of Justice, the Parliamentary Ombudsman, or the Public Administration Select Committee. A rebuke from a massive cross-party coalition will hopefully force the Government to listen."

The Pension Bill - with the agreed amendments - will now return to the House of Commons for its third reading, where Gordon Brown, the new Prime Minister, will have to decide whether or not to support the changes after he was absent for the previous vote in the Commons in April, when the amendment was defeated by just 22 votes.

Phillip Hammond, Conservative Shadow Secretary of State for Work and Pensions, says: "This will be the first major test of Gordon Brown's premiership. Does the man who is raiding £5bn a year from pension funds have the decency to back this proposal to help those whose pensions he has decimated? Trust in the pensions system cannot be restored until a just and equitable solution is found for the 125,000 victims of pension scheme failure."