Secretary of state for work and pensions Peter Hain has confirmed that, as well as increasing assistance for those affected to 90 per cent of their accrued pension, the settlement will extend cover to 11,000 people in schemes wound up by qualifying solvent employers.
The pledge to make payments to the disadvantaged scheme members was made on the same day as publication of the Young Review – commissioned by the Government to look at ways of generating additional value from the failed pension schemes.
The report, by Government Directing Actuary Andrew Young, demonstrated that, if the residual assets in failed pension schemes totalling over £1.7 billion were brought into Government, then it would be possible – with an additional top up by Government – to meet the demands made by trade unions and campaigners for the workers who lost their pensions.
The Government says its latest offer adds up to an extra £3.9bn in cash terms, or £935 million in Net Present Value. This is on top of the £8.6bn in cash terms, or £2bn in Net Present Value already committed.
The Financial Assistance Scheme will be extended so that all scheme members will be guaranteed 90 per cent of their accrued pension at the date their scheme began wind-up. This will be subject to a cap of £26,000.
Assistance payments derived from pension accrued post-1997 will be increased each year in payment in line with inflation. Assistance will be paid from each failed scheme’s normal retirement age, subject to a lower age limit of 60.
Altmann says: “This is a decent compromise. The Treasury have been awful, but the DWP have started behaving in a way you would expect Labour ministers to behave towards workers, rather than say it is nothing to do with them. The Parliamentary Ombudsman, Public Administration Committee and High Court Judicial Review verdicts all ruled that the Government misled these workers about thesafety of their pensions and must properly compensate those affected.
Hain says: “We believe this represents a just and final settlement – bringing the total commitment to £12.5bn in cash terms. Although the Government has been criticised over this matter, these 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.”