The
Committee consisted of the following
Members:
Breed,
Mr. Colin
(South-East Cornwall)
(LD)
Browne,
Mr. Jeremy
(Taunton)
(LD)
Buck,
Ms Karen
(Regent's Park and Kensington, North)
(Lab)
Burden,
Richard
(Birmingham, Northfield)
(Lab)
Cunningham,
Mr. Jim
(Coventry, South)
(Lab)
David,
Mr. Wayne
(Caerphilly)
(Lab)
Duddridge,
James
(Rochford and Southend, East)
(Con)
Grogan,
Mr. John
(Selby)
(Lab)
Love,
Mr. Andrew
(Edmonton)
(Lab/Co-op)
Main,
Anne
(St. Albans)
(Con)
Malins,
Mr. Humfrey
(Woking)
(Con)
Mates,
Mr. Michael
(East Hampshire)
(Con)
Mole,
Chris
(Ipswich)
(Lab)
Morden,
Jessica
(Newport, East)
(Lab)
O'Brien,
Mr. Mike
(Minister for Pensions
Reform)
Singh,
Mr. Marsha
(Bradford, West)
(Lab)
Waterson,
Mr. Nigel
(Eastbourne)
(Con)
Celia Blacklock, Committee
Clerk
attended the
Committee
Second
Delegated Legislation
Committee
Monday 19 May
2008
[Mr.
Greg Pope
in the
Chair]
Draft Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2008
4.30
pm
The
Minister for Pensions Reform (Mr. Mike
O'Brien):
I beg to
move,
That the
Committee has considered the draft Financial Assistance Scheme
(Miscellaneous Provisions) Regulations
2008.
I welcome you to
the Chair, Mr. Pope. Under your fair and firm leadership, I
am sure that we shall make good progress.
I am pleased
to bring the regulations before the Committee. They are the first key
steps to delivering the full package of reforms to the financial
assistance scheme that we announced on 17 December last year. As hon.
Members will be aware, in December, following a review by Andrew Young
of the Government Actuarys Department, we were able to announce
a final settlement for the 140,000 people who had lost their pensions
through no fault of their own. The announcement guaranteed that all
qualifying members would receive 90 per cent. of their accrued pensions
subject to a cap, instead of 80 per cent. as before, and that their
pensions would be paid from a members normal retirement age or
at 60 if their normal retirement age was earlier, rather than from the
age of 65. Certain members would be able to apply for early reduced
payments on ill-health grounds. The settlement also extended assistance
to some 11,000 members of schemes connected to solvent employers. We
were able to do that by taking in the residual assets of those failed
schemes and matching them with further Government money. That means
that the total FAS benefits stand at £2.9 billion in
net present value, which represents an increase of
£0.9 billion in net present
value.
Our
aim is to ensure that payments can be made as quickly as possible, so
the measures under discussion form part of a package of regulations and
legislative changes that will come before a Committee in the next few
months to enable such changes to take place. While some changes are
relatively simple to deliver, others are complex. Earlier this year,
Opposition Members and other stakeholders agreed with the proposals to
deliver the reforms in phases that will help to ensure that changes are
made as quickly as possible. The regulations that we are discussing
will implement the first two cornerstones of the reforms: payment of
the 90 per cent. rate and payment from the normal retirement age, or
NRA.
For many current
FAS recipients, these changes alone will make FAS assistance broadly
comparable to Pension Protection Fund compensation. However, there is
still some way to go to deliver the full reform package for all
beneficiaries. During the next months, I
expect to bring forward further regulations before the House, and by the
end of the year we intend to consult on the final package of
regulations that will deliver all the changes. In addition, we plan
some amendments to primary legislation under the current Pensions Bill.
We hope soon to table an amendment to the Bill that will allow us to
continue to prevent trustees of FAS qualifying schemes from
annuitising. The prohibition currently in place to stop trustees
purchasing annuities has effect up to and including 25 June this year.
We intend our amendment to have a retrospective effect back to 26 June
to plug any gap that would otherwise arise and help to ensure the
protection of the assets that will be taken in by the
Government.
Mr.
Nigel Waterson (Eastbourne) (Con)
rose
Mr.
O'Brien:
In anticipation of the question that I am about
to be asked, I must explain that we cannot just roll over the current
provisions because the statutory basis on which they have been created
allows us only to do it for nine months, not to roll it over. We can
act only by having retrospective legislation that will plug the gap to
26
June.
Mr.
Waterson:
Despite our growing reputation as the odd couple
of the pensions world, that was not the question that I was about to
ask the Minister. I want to know whether, despite his exhortations some
months ago, there was any evidence that these schemes have continued to
indulge in bulk annuitisation, thereby reducing the assets available
for the purposes of the new regulations following the Young
report.
Mr.
O'Brien:
I am aware of no evidence suggesting that they
have been trying to annuitise. If they tried to do that at the moment,
they would be in breach of the regulations and therefore the law, so we
do not anticipate any of them doing so.
The difficulty arises after 26
June when the current provisions are no longer in place. At that point
there is a lacuna, and we intend to plug that gap by way of
retrospective legislation that will be put into effect once the
Pensions Bill is in place. That will be retrospective to 26 June. We
intend to write to trustees of pensions schemes to make them aware that
they will be covered by that retrospective legislation. We will not
have a situation whereby people will be unaware of the provision that
prevents them from annuitising. I am also keen to ensure that we find a
solution for the handful of schemes such as Desmond and Sons, which
currently fall outside both FAS and PPF provisions. This is a difficult
and complex issue, and I wanted to flag it up. I hope that in due
course we will be in a position to deal with it, although I cannot
guarantee that at the moment. I have heard representations from several
hon. Members who are concerned about the case involving Desmond and
Sons, and we are aware of two other such companies.
As of 9 May 2008a few
days agoover 5,500 beneficiaries are in receipt of FAS
payments, and about £18.5 million has already been paid through
the FAS scheme. That is a big increase on the same time last year, when
only 1,100 people were being paid. The regulations will increase
payments further. We have
already received information on about 300 members who will be eligible
for payment as soon as the regulations come into force. We estimate
that some 5,000 people are currently between their normal retirement
age and 65 and will benefit over the coming months as information is
provided to us. There will be practical benefits for those
people.
As well as
delivering the 90 per cent. rate from normal retirement age, the
regulations make several more detailed changes to support those
enhancements. Complementary changes are made to the Pensions Act 2007
to ensure that primary legislation is consistent with the changes to
secondary legislation. Those regulations include some amendments to
FAS, revaluation rules and transitional protections for certain members
affected by the changes. Under current FAS rules, assistance payments
are revalued to 65 regardless of the members NRA. Under the
changes to FAS made by the regulations, FAS payments will now be made
from NRA with a lower age limit of 60. That means that payments for
some people already receiving FAS will be reassessed, and new
entitlements will be paid for the period from the NRA. Bringing
payments forward for such members means that the period of revaluation
will be shorter. That is important, because in some cases where there
is a significant period, such as a number of years, between the NRA and
age 65, the reduction of the period of revaluation may mean that
ongoing payments will not increase significantly when payments are
reassessed from 80 to 90 per cent. They may get their lump sum, but
there will be a reduction in the revaluation, and that must be borne in
mind. In some extreme caseswe do not know how many, but there
will possibly be a small numberalthough people will get the
backdated payment, the ongoing payments might fall. However, any
members in that position will receive significant lump sum payments to
cover the period from their NRA.
The regulations also include
related changes to the revaluations applying to deferred
members accrued pensions, which, in certain cases, can apply
beyond the age of 65. The regulations will make changes to ensure that
accrued pensions cannot revalue beyond that age. Those changes might
mean that some beneficiaries whose entitlement date does not change may
not see a significant increase in their ongoing payments. It is
unlikely that members existing payments will fall as a result
of the changes, but if they do, the regulations will provide
transitional protection. We do not think that many people will be
affected detrimentally but, just in case, we have included transitional
protection so that ongoing assistance payments to those already
receiving FAS payments and whose entitlement date does not change will
not be reduced. We will provide those
safeguards.
The
regulations amend payment ages for certain FAS beneficiaries who
qualify as a result of death benefits payable by qualifying schemes.
Depending on individual pension scheme rules, some spouses, unmarried
partners or dependent children of pension scheme members who die before
the start of scheme wind-up will qualify for their pensions. When
assets are allocated by schemes in wind-up, such members
pensions will receive a high priority, so we expect that most of those
beneficiaries will receive their pensions in full. However, some
schemes are so underfunded that such people will receive less than 90
per cent. of the
pension that they were expecting. FAS allows some members to qualify for
FAS top-up assistance payments. Under current FAS rules, such members,
in common with other qualifying members, will receive payments from the
age of 65. In order to reflect the revised payment rules applying to
other FAS members, such people will be eligible for payment from the
date when they become eligible for payment under the qualifying scheme
rules or, if later, from 14 May 2004the date when FAS started.
Some recipients might have qualified for payments as dependent children
and, under typical pension scheme rules, payments to dependent children
are made only until a fixed age18, or when they leave full-time
education. To reflect those arrangements, the regulations specify that
assistance payments to any such recipients will end on the date when
they would have stopped receiving their pension from their pension
scheme.
I
should like to offer a word of thanks to Members from both main
Opposition parties for their support in facilitating the speedy
implementation of the regulations. I am also grateful for their
agreement, which also came from many other stakeholders, to a two-week
written consultation periodthat is not normal, but we wanted to
expedite the process. We published a full response to the issues raised
during that consultation, and I shall say a few words about two
substantive matters. First, some respondents noted that FAS payments
will only continue to be made from 14 May 2004the date when FAS
was first announcedeven if members reached their normal
retirement age before then. We continue to believe that it is right
that FAS payments relate only to periods after the date when FAS was
first announced. However, we will consider that point further as part
of a consultation on draft regulations later in the year.
Secondly, it was noted that the
definition of NRA used in the regulations might not reflect
members expectations of the age at which they would have been
able to take some or all of their scheme under the scheme provisions,
and they might have elected to take it earlier. We will consider that
in the context of achieving a broad comparability with the PPF subject
to further consultation on draft regulations later in the year. We will
assess how the PPF works and then see whether we can put together
regulations that are broadly comparable. Again, I make no commitments.
We want to consult on the matter and consider it further. We will have
a public consultation and introduce regulations later in the year. We
have retained the definition of NRA in the regulations to enable
enhanced payments to be delivered as quickly as possible using
information already held by the operational unit.
We have built
strongly on the foundations provided by the Young review. The
announcement that we made in December will ensure that all the 140,000
people who cruelly lost their pension through no fault of their own
will receive benefits that are broadly comparablenot exactly
equalwith the PPF. We are maintaining our momentum with the
regulations, which will deliver key elements of the reforms to the
immediate benefit of many members. I hope that Members will feel able
to endorse the regulations, which are compatible with the European
convention on human rights. It is with great pleasure that I commend
them to the
Committee.
4.46
pm
Mr.
Waterson:
May I say what a pleasure it is to be
serving under your chairmanship, Mr. Pope? I hope that we
can deal with the regulations with reasonable expedition. As the
Minister said, they are the first instalment of a series of regulations
that have been consulted on, some of which are more difficult to
enshrine in legislation than others. It is fair to say that the
Opposition broadly welcome the regulations as far as they go, and the
ones that are envisaged for the future. They underline the fact that
the Government have now accepted that they were guilty of
maladministration in the case of 140,000 people. That acceptance
happened the day that they withdrew their appeal in the High Court in
the case being conducted with the pensions actions groups. We are
pleased that that has happened and that we are now all talking about
the same thing, which is how, in the most effective way, can we get
help to the people who need
it.
The Minister
kindly updated a letter that he wrote to me after a similar Committee
discussion in December in which he gave me the number of people
receiving payments under FAS. The figures ranged up to 12,000 a year,
and at that stage it was 3,540. I am pleased that the Minister has been
able to tell us that as of 9 May, it is 5,500. I might probe him a bit
more on that.
In the
Ministers letter of 19 December, he said that
once member data has been
received, it usually takes about 3 months for members to start
receiving payments...we have sought to speed up the initial
payments process by streamlining the data requirements for members who
may be eligible for these payments.
As well as knowing the total number of
people currently in receipt of FAS payments, it might help the
Committee to know how much the Government have been able to streamline
and speed up the process of getting payments to people who have
legitimate claims. Of the people who qualified under the existing FAS
rules, how many are still waiting for their claims to be processed?
Again, although the Minister indicated in the letter that he did not
think that it was a particularly realistic measure, what is the average
time it is taking for people to get their claims in
payment?
Another
subject that the Minister has touched on in previous debates is the
administration of FAS being taken over on a day-to-day basis by the
PPF. Perhaps he can give us a brief update on how that is going and the
extent to which FAS continues to be an independent organisation. The
official Opposition have urged for a long time that it should be rolled
into the PPF and administered by the same
people.
In an
intervention, I touched on the matter of the purchase of bulk
annuities. Although the Minister might not know off the top of his
head, it would be helpful to know whether, in that interregnum, any
trustees of particular schemes continued to buy bulk annuities and,
therefore, to dissipate scheme assets, contrary to the recommendations
of the Young
report.
On the new
rules, will the Minister give his calculations of how many new
claimants he envisages dealing with once the regulations come into
force? Again, that refers back to my earlier question. To what extent
is the system geared up to deal with them expeditiously, once the
claims come in?
Mr.
O'Brien:
Just for clarification, I did not catch whether
the hon. Gentleman is asking for figures for when these regulations are
in place or when the whole range of regulations is in
place.
Mr.
Waterson:
The Minister obviously noticed a slight
hesitation on my part. I originally intended to ask him about when the
whole package comes in, but it is only fair to ask about this
particular package. If he has the figures for when the whole package is
brought in, that would be helpful. However, clearly, a new cohort of
people will be involved as a result of this
package.
I shall touch
on taxation, on which there have been some exchanges on the Floor of
the House. I want to be absolutely clear what it was that the Secretary
of State said the other day. There was, as the Minister knows, the
concern of people who were going to receive back-payments for several
years, forcing them into a higher tax bracket, so that they could end
up paying tax at the top rate, simply because they were receiving the
money in a lump sum. According to what I have written down, the
Secretary of State said, I think in questions not long ago,
that
FAS payments
relating to a past period need not be taxable in full in the year in
which they are received. As a result, people will pay no more tax than
they would have done if the payments had been made in those
years.
That is
reassuring.
However, a
slightly different principle is that those pension victims do not wish
to feel that they are going to be penalised, from a tax point of view,
for having had to work over the past few years, in many cases beyond
their retirement age, because they have not been receiving their
pensions. Sadly, the Government are not offering any interest on the
payment of arrears, even though some of the money should have been paid
a few years ago. One of the arguments of the Pensions Action Group is
that those arrears should be treated in the same way as top-slicing
relief, which applies to life policies, whereby, as I understand it,
the sum received should be divided by the number of years to which the
payment relates and then taxed at the marginal rate applying to that
amount. I do not know if the Minister is able to tell me whether any
detailed progress on those issues has been made, but those are two
distinct taxation questions, which, if we are finally to offer complete
fairness to those 140,000 people, need to be
addressed.
I have a
few detailed points on the regulations. I particularly welcome the
transitional relief that will ensure that some people who are already
receiving FAS payments at a certain level will not have them reduced.
That is only fair and appropriate in the circumstances. I welcome the
fact that we are waving goodbye, finally, to the wholly bogus notion of
the core pension, which was invented when FAS was set up. We are now
looking at peoples accrued pension rightsthey are
getting 90 per cent. of them, subject to the cap. The Minister
touched on the normal retirement agea major bone of contention
for the pension victimsthe question of indexation and the
difficult but important issue of where the employer is still
solvent.
Although
a tough Chairman might rule me out of order, will the Minister give us
at least an update on where we are with the other regulations, the
consultation period, the response to the consultation and when we
are likely to re-gather in a room not dissimilar to
this one to debate them? I am talking particularly about such matters
as ill health, which I appreciate raises complicated issues. I know
that officials discuss it regularly with the Pensions Action
Group.
We know that
the end point is meant to be FAS payments reaching a level broadly
comparable to those payable by the PPF. If the Minister is minded to
give me the details that I have asked for, perhaps he will indicate to
what extent any of the changes will be retrospective. I thank him for
his kind remarks about our agreement to a foreshortened consultation
period. We were happy to do that, because our aim has always been to
get help to those who deserve it as quickly as
possible.
May we look
ahead slightly to some of the issues that remain to be dealt with? I
have mentioned ill health, and I gather that the annuity factor applied
to FAS needs to be considered. The Minister will not address it in
detail now, but he may wish to touch on the time scale for dealing with
it.
The
Chairman:
Order. I hesitate to interrupt the hon.
Gentleman, but some of these issues are wider than the regulations
before us. I advise the Minister, when he responds, to relate his
comments to the
regulations.
Mr.
Waterson:
Thank you for that guidance, Mr.
Pope. I was merely seeking to put these matters in
context.
Finally,
it is important to consider one of the memorandums submitted to the
Pensions Bill Committee by the Pensions Action Group. It makes the
point that many of its members have had
to
work in hard physical
jobs to make ends meet. It has been a long struggle to get the
compensation to levels where they should be, please do not make us wait
any longer than necessary to actually see the financial help that has
been offered.
It is
worth making the point, lest it be lost sight of, that as a result of
the Young report, which we thought an excellent piece of work, and the
decisions that the Government made on the back of it, the Treasury will
have a significant cash-flow benefit from taking over the remaining
assets of the affected pension funds. That seems to be an extra reason
why the Government should be falling over themselvestheir
favourite position at the moment, perhapsto make payments
sooner rather than
later.
All that the
Opposition care aboutall that we have ever cared
aboutis getting help to the people who desperately need it, as
quickly as possible. I have no intention of inviting my hon. Friends to
divide the Committee on what is, after all, the first step on the
Governments long journey to redeem their moral obligation to
the 140,000 pension
victims.
4.58
pm
Mr.
Colin Breed (South-East Cornwall) (LD): I shall not detain
the Committee, either. We welcome these proposals as a first step. Like
the hon. Member for Eastbourne, I emphasise that speed is of the
essence. People are waiting, and life is not easy for many of them. The
process needs to be sped up so that the recipients can rely on the
moneys coming to them. We hope that the journey that has begun will be
completed later this year. We welcome the regulations and the proposals
as a whole, and we should give them good speed
today.
4.59
pm
Richard
Burden (Birmingham, Northfield) (Lab): As one of those who
has banged down the door of the Minister and his predecessors for a
long time, I add my thanks to him and his colleagues for grasping the
nettle and making the statement last December that has led us to
consider the
regulations.
Paragraphs
7.22 and 7.23 of the explanatory memorandum to the regulations state
that of the 28 responses to the consultation, many were about not the
issues covered by the regulations but matters that will be considered
later this year. Given the interest and concern about these matters on
the part of the pensioners and deferred pensioners who are affected,
will the Minister provide at least a broad indication today about when
those further regulations are likely to be considered? I understand
that he will not be able to say anything definite, because such things
need to be done right. However, he knows that the pension scheme that
is particularly relevant to my constituentsKalamazoohas
a particular issue relating to indexation, which is a matter of detail
that is nevertheless important. That has already been the subject of
correspondence between us, but it would be helpful if he said
something, because, as paragraph 7.23 says, those issues can be
considered later, when we are in a position to do
so.
5
pm
Mr.
O'Brien:
I should like to deal with some of the points
that have been raised. First, I thank Committee members for the helpful
way in which they have dealt with the debate on the
regulations.
On the
points raised by the hon. Member for Eastbourne, as I indicated, there
are probably some 5,000 new claimants who are between the NRA and the
age of 65, so that is the potential number involved. There are about
300 at the moment, but we expect others to start contacting us as soon
as they know that the provisions are in
place.
In terms of the
whole package, obviously 140,000 people will ultimately be affected,
but many of those are below pension age and, in some cases,
significantly below pension age, so a significant period of time will
have to pass before they all come on to the scheme. Of course, by that
stage, no doubt some of those who are on the scheme now will have
passed on. It is difficult to estimate the total number once all the
package is in place, but it will certainly be a considerable number
beyond those whom we are paying now, and it will start to increase
progressively over the decades to
come.
FAS recipients
have to pay their taxes, but we do not want them to be unfairly
penalised as a consequence of receiving lump sum payments relating to
past periods. That is essentially what we are seeking to achieve. We
recently confirmed that FAS payments are to be treated as pension
income for tax purposes and that any FAS payments would therefore be
subject to existing pension income tax rules. FAS payments paid in a
lump sum, where the payment relates to previous years, will be taxed in
the same way as pension income arrears. The existing rules state that
such payments require income tax to be deducted initially through the
pay-as-you-earn system in the year that they are received, but that the
payments can subsequently be allocated to the years to which the
payment relates.
That would mean that the tax would be adjusted
accordingly, depending on the individuals personal
circumstances in those years, and they would pay the tax that they
would have paid in those
years.
We have
discussed with members of the Pensions Action Group, and a number of
other people, how people should be dealt with when they receive their
tax payments. They will be advised how and why tax has been deducted
for their payments, including payments for the past sums. They will be
told what payments have been made in relation to the lump sums and what
steps they can take, if they choose to do so, to obtain an adjustment
of their tax for previous years. We are continuing to consult on this
approach and on the information that we need to give to support
members.
The
aim is properly to inform those in the FAS system who are receiving the
lump sums about their rights so that they can apply to Her
Majestys Revenue and Customs to see whether they can get the
tax treated as if it related to previous years. In such cases, there
will be a retrospective compensatory payment from HMRC. However, I want
to be clear that the decision is for the FAS recipients to make. That
is important, because some people may choose not to do that and that is
their right. If, for various tax reasons or other reasons, they do not
want to have their tax circumstances looked at over previous years or
for the lump sum to be treated as if it were paid over previous years,
they will have to look at their personal circumstances in relation to
that.
Mr.
Waterson:
I am grateful to the Minister for that
explanation. Before he moves on, I wonder whether he can deal with a
slightly separate point, which is those people who have been forced to
carry on working beyond their retirement agebeyond even the
state retirement ageto make ends meet, because they have not
been receiving their pension? Will there be any special treatment for
the fact that, of course, their income, if these payments are allocated
back over the past few years, will be that much higher as a result of
having to work when they had no particular wish to, and they would have
had no need to work had they been receiving their pension payment in
the usual
way?
Mr.
O'Brien:
The way that we are treating the financial
assistance scheme recipients at the moment is not, in a sense, special;
they will be treated in the normal way under the pension rules. What we
have done in relation to those who are receiving lump sums is to ask
HMRC if it will treat such payments as a lump sum payment, even though
it has come under statute rather than as a lump sum under the pension
rules, which those people ought to have received in previous years.
HMRC has agreed to do that.
Regarding a lump sum payment
received by someone who has continued to work beyond the age of 65,
those people will have to make an application under the normal pension
rules. I would have to go back to HMRC to confirm how they would be
treated, but I am happy to do that. As far as I understand it, they
would be given pretty much the same treatment as someone who received
the payment and was under the age of 65. We are just talking about
people who start receiving the payment at the age of 65. However, let
me double-check that.
The hon. Gentleman and my hon.
Friend the Member for Birmingham, Northfield asked about the time
scales in relation to some of the various other regulations. This is
the first block of regulations that we propose to put in place. We are
looking for this first package to be in place in June, with the first
payments at 90 per cent. They will be from normal retirement age or 60,
rather than 65. There will also be the implementation of some of the
revised annuity
factors.
By the end of
July, we hope to have a second package of regulations coming into
force, including ill-health payments, certain solvent scheme payments,
ground work for greater PPF involvementI will come to that in a
momentand the speeding up of
payments.
We hope that
the first ill-health payments will be made in August, subject to
receiving information from the trustees. All current recipients will
have been reassessed at 90 per cent. paid from NRA. By the end of the
year, we hope to be in a position to consult on further regulations to
deliver the full December package, including post-1997 indexation,
payment of FAS lump sums and bringing in assets. From April 2009, we
hope to have phased in the implementation of the full package. That is
the current time scale that we are working
on.
Let me return to
the issue of PPF involvement. The second package of regulations
included measures to facilitate the PPF to be more closely involved in
developing the new FAS operations. On Third Reading of the Pensions
Bill, I indicated that, subject to the outcome of consultation, we were
hopeful that the PPF would be able to take a formal operational role in
the extended FAS scheme. The PPF has vast experience in working with
schemes in wind-up and taking on scheme assets. I believe that its
involvement will be invaluable in helping to put together a very
similar process for pension schemes in FAS.
We are hoping that the PPF will
have a great deal more involvement and, in due course, that it will
have oversight of this operation. There are still some discussions and
consultations to go on in relation to that, but there is fairly strong
progress. I invite the hon. Members for Eastbourne and for South-East
Cornwall to have discussions with the PPF to see what views it is
currently taking. I am sure that it would be very candid and positive
about how things are going.
I was asked a number of
questions in relation to payments being made into annuities. Trustees
can make requests to the Department to allow annuitisation to take
place. Some trustees had prior commitmentsindeed, binding
agreementsto annuitise and we must look at those with a great
deal of care. Trustees can apply to annuitise up to 25 June, the day
before the order accedes. We have received a handful of applications to
annuitise; none of those has been given approval so far, but we will
look at each of them in due course and see what we can do.
I was also asked whether we
have done anything to speed up payments and to educate trustees on the
importance of providing information so that we can get on with making
the payments. Officials have now held meetings with the majority of
trustee representatives of FAS schemes to ensure that they understand
what information is required, and to ensure that through their regular
e-mail updates they provide guidance to trustees about the current FAS
position and our
requirements. The guidance on member data provision has been clarified
and the information needed from schemes has been simplified. Officials
have clarified the specific information that we require in individual
cases, to ensure that the same data is provided to us on only one
occasion, to speed up the process.
I was also asked about core
pensions. FAS assistance is broadly comparable to compensation paid by
the PPF. The term core pension was used in the original FAS scheme to
indicate that FAS assistance did not include all the benefits that
individual schemes have offered. The position changed with the
announcement in December. For some people the changes that we are
making through these regulationsto pay 90 per cent. of the
crude pension from NRAwill put them in a position where the
amount of FAS assistance that they receive will be broadly comparable
to the PPF.
Mr.
Waterson:
It may just seem like a bit of terminology, but
would it not make sense to stop using the word assistance altogether,
and start using the word compensation, in recognition of what is now
the reality?
Mr.
O'Brien:
Calling the outputs of a financial assistance
scheme by a different name does not make a lot of
sense; it is a financial assistance scheme and assistance is what it
provides. I am not sure that there is any great wish to change the
phraseology and it is not necessary to do so. That may suit a
rhetorical device, but let us stick to helping real people with real
problems, rather than trying to score points with words.
I look forward to the further
regulations that will be introduced and I welcome the broad support
that there has been for these regulations. They present a significant
start towards delivering benefits to people who have lost their
pensions or part of their pensions. Passage of these draft regulations
will allow the FAS operational unit to be in a position to start making
enhanced payments to members and survivors next month. That will make a
significant, and in many cases, an immediate difference to the lives of
those affected by pension losses and I therefore commend the
regulations to the House.
Question put and agreed
to.
Resolved,
That
the Committee has considered the draft Financial Assistance Scheme
(Miscellaneous Provisions) Regulations
2008.[Mr.
Mike
OBrien.]
Committee
rose at Fourteen minutes past Five
oclock.