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Session 2008 - 09 Publications on the internet Public Bill Committee Debates |
The Committee consisted of the following Members:Eliot Wilson,
Committee Clerk attended
the Committee Tenth Delegated Legislation CommitteeTuesday 17 March 2009[Robert Key in the Chair]Draft Financial Assistance Scheme and Incapacity Benefit (Miscellaneous Amendments) Regulations 20094.30
pm The
Minister for Pensions and the Ageing Society (Ms Rosie
Winterton): I beg to move that
the Committee has considered the draft
Financial Assistance Scheme and Incapacity Benefit (Miscellaneous
Amendments) Regulations
2009. It
is a pleasure to serve under your chairmanship, Mr. Key. The
financial assistance scheme provides assistance to qualifying members
of qualifying defined benefits schemes who face pension losses because
their scheme was underfunded at the point when it was wound up, and the
employer is insolvent, or no longer exists, or has a compromise
agreement in place. Because the Government recognised the difficulties
experienced by those who through no fault of their own could not
collect occupational pension benefits for which they had saved, we set
up, in 2005, the Pension Protection Fund, to protect people whose
pension scheme failed after 2005. The PPF is funded by a levy on
schemes. For those who were members of pension schemes that failed
between 1997 and April 2005, we set up the financial assistance scheme,
with funding from the taxpayer.
In December
2007 we announced a package of enhancements to the financial assistance
scheme, which means that those who are entitled to assistance receive
payments broadly equivalent to the compensation paid by the Pension
Protection Fund. We have already introduced regulations so that all
eligible members can receive 90 per cent. of their expected
pension from their normal retirement age, instead of the previous 80
per cent. for those within three years of retirement age. Without the
financial assistance scheme, many eligible members would receive a
significantly lower pension, or even no pension at
all. We
have paid more than £50 million to 10,420 people so far, and we
estimate that about 140,000 people will receive assistance from the
financial assistance scheme in the long run. The FAS pays assistance in
the following circumstances: when members reach their normal retirement
age, with a lower limit of 60 and an upper limit of 65; from any age,
when the member is terminally ill and expected to die within six
months; and from up to five years before normal retirement age where
the member is unable to work as a result of ill health and is expected
to remain so until normal retirement age. Those ill-health payments are
actuarially reduced to reflect the fact that they are paid from an
earlier
age. The
draft regulations before the Committee introduce a fourth instance in
which assistance can be paid, and that is to members aged 55 and above
who are experiencing severe ill healththat is, they are
suffering from a progressive disease that is expected to lead to death
after a period of between six months and five years.
Assistance in those cases would be unreduced. We have introduced the
draft regulations in response to concerns that a small number of people
with ill health that would lead to significantly reduced life
expectancy could otherwise be excluded from early access to assistance
under the current ill-health provisions. The additional provisions are
likely to affect only a small number of people. However, the impact on
those people should be hugely
beneficial. The
Government responded to stakeholders and campaigners
concerns that a small number of members who had been severely ill for
some time were disadvantaged because the draft regulations were not in
place. Draft regulation 7 therefore makes provision to put such people
in the position that they would have been in if severe ill-health
payments had been available since May 2004 when the financial
assistance scheme was announced.
First, severe
ill-health payments can be made for periods before the date of
application in cases where a person can demonstrate that they would
have met the qualifying conditions at an earlier date. Secondly,
provision is also made for survivors or personal representatives to
apply for severe ill-health payments for a past period on behalf of
anyone who would have met the qualifying conditions, but who has
unfortunately died before the regulations came into force. Thirdly, a
scheme member currently receiving reduced ill-health payments will be
allowed to apply for the new, unreduced severe ill-health payments if
they believe they would have met the qualifying conditions if the
provisions had existed
earlier. Furthermore,
regulation 2 amends the Social Security (Incapacity Benefit)
Regulations 1994 to provide that FAS payments are treated as pension
payments for the purposes of that benefit. I am sure that the Committee
will be pleased to know that we hope to start making payments to those
who qualify by the end of April, subject to the provision of relevant
information from applicants and their medical practitioners. I hope
that the Committee agrees that the Government have listened and
responded to campaigners concerns, and that the regulations
ensure that there is a comprehensive package of provisions to cater for
the range of circumstances that may unfortunately prevent FAS members
from working until their normal retirement age. The regulations are
compatible with the European convention on human rights and I commend
them to the
Committee. 4.36
pm Andrew
Selous (South-West Bedfordshire) (Con): It is a pleasure
to serve under your chairmanship, Mr. Key, and I welcome you
to the Chair. There is widespread agreement on the need for the
regulations, and the Conservative party warmly welcomes them, so the
Committee need not be detained for long. The regulations introduce a
degree of retrospective legislation, which I am generally against when
it involves removing entitlement. However, in this respect, such
legislation gives people an additional entitlement in tragic
circumstances, so it is right and proper, as are the provisions to make
payments to a deceaseds estate in certain circumstances, which
I also
welcome. We
welcome the severe ill-health test which, as the Minister has outlined,
is now applicable to all those over 55, and not only those within five
years of their normal retirement date, who suffer from a progressive
disease and are expected to die within five years. That is
also right and proper, and is to be warmly welcomed, as are the
provisions in relation to incapacity benefit. The fact that, under the
regulations, FAS payments will be treated as pension payments when
considering eligibility for incapacity benefit is only fair to those
who are not entitled to that benefit due to other non-FAS pension
payments. As
I have said, we broadly support the regulations, but there are one or
two issues that I wish to raise. The Minister said that the regulations
will benefit a small number of people; frankly, they would be worth
introducing if they benefited only one person. However, will the
Minister give us an idea of the numbers involved so that we can have
some sense of scale? Furthermore, are there any particular types of
diseasesindustrial diseases perhapsthat are likely to
be covered by the provisions that were excluded when the six-month
rule, which the regulations amend, was in place? Finally, on behalf of
the Unionist party, may I point out that some of the regulations do not
apply to Northern Ireland, so I would be extremely grateful if the
Minister would explain the position in relation to that important part
of the UK in her concluding
remarks? 4.38
pm John
Barrett (Edinburgh, West) (LD): The Liberal Democrats,
too, welcome the regulations. When we studied the details of what was
originally proposed, it was rather gloomy because we were dealing with
shortened life, the six-month rule, terminal illnesses and so on. Many
Members of Parliament have family and friends who fell into those
categories, so I welcome todays changes. Sadly, the insolvency
of employers in the recession will be an increasing problem, so anyone
who benefits from the financial assistance scheme will appreciate it.
However, I have one question. The provisions say that establishing an
individuals life expectancy will be a role for the
Departments medical advisers, but the final decision will rest
with the FAS scheme manager. In our constituencies, we all know of
people who have gone along to appeals and found that the doctor and
consultant have given one view, and the expert on behalf of the
Department for Work and Pensions has not agreed with it. What will the
appeals procedure be in such cases at a time when a family are having
to deal with a terminal illness, as well as a Government Department and
a lot of other issues? The need to ensure they receive their money at
the right time is something that should be clear. I am also pleased
that the actuarial calculations for someone who has reduced life
expectancy under the changes will not mean that they receive a reduced
amount of money. It is perfectly natural to assume that someone who
does not have long to live will not draw a pension for a long time into
the future. As I have said, we broadly welcome the
changes.
4.41
pm Ms
Winterton: I thank the hon. Members for Edinburgh, West
and for South-West Bedfordshire for their support for such important
regulations. Let me address the issue of Northern Ireland. A
corresponding provision will be made to cover people in Northern
Ireland. As for how many people will benefit from the regulations, it
is hard to estimate. We expect the numbers to be very low. None the
less, I take seriously the comment of the hon. Member for South-West
Bedfordshire that even for one
person, this could make an important difference. Currently, there are
more than 100 people [Official Report, 24 March 2009, Vol. 490 c. 1-2MC.] receiving reduced ill-health payments. We expect
only a small percentage of those people to meet the criteria for severe
ill-health payments. In addition, those benefiting from the new
provisions will include a small number of people who are not currently
eligible for reduced ill-health payments because, for instance, they
are more than five years from their normal retirement age.
As for how
the system will work through to appeal, we will ask people to send the
relevant information to medical advisers at the FAS operational unit.
The decision can be reviewed internally, but eventually someone can go
to the Pension Protection Fund ombudsman if they feel that they have
not been dealt with properly. It is quite difficult to be specific
about the types of diseases. One example that I was discussing earlier
today was coronary heart disease. Normally, when we consider
progressive diseases we think of illnesses such as Parkinsons
disease and multiple sclerosis. However, in the case of coronary heart
disease, if someone has a heart attack, they might have a heart bypass,
fully recover and expect to live for longer than five years. Some
people may find that the effects of coronary heart disease mean that
their prognosis is less than five years. Therefore, a payment is
related more to how the individual is judged by their physician as
opposed to our being able to link it to particular
diseases. Mr.
Oliver Heald (North-East Hertfordshire) (Con): On the
question of ensuring that people are aware of the new rights that will
be available to them, I notice that the explanatory notes refer to
putting information on the website and updating leaflets. However, in
cases in which someone has died, and the estate wishes to make a claim
under the provisions, will that be enough? Is the Minister satisfied
that all the people who might make a claim will be aware of the new
provision? Ms
Winterton: As the hon. Gentleman may know, there are a
number of lobby groups, which have, in a sense, represented those
people. There are some people of whom we are aware, and whom we will
possibly contact ourselves anyway, given that the regulations will
hopefully be passed. We can contact some of the known survivors, and we
will make every effort to try to contact others if we are able to
access information about them. However, given that there has been a
high-profile campaign, we hope that people will be aware of their right
to
apply. As
I said, we introduced the draft regulations in response to concerns
that there were a small number of people with ill health that leads to
significantly reduced life expectancy, who could otherwise be excluded
to early access to assistance under the current ill-health provisions
of the financial assistance scheme. I hope that the Committee will
agree that we have listened to campaigners concerns and
developed the regulations though careful consultation. Even though they
are most likely to affect a small number of people, the regulations
will have a significant and positive impact on those who are affected
by severe ill health, and I commend the regulations to the
Committee. Question
put and agreed to.
4.47
pm Committee
rose. |
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©Parliamentary copyright 2009 | Prepared 25 March 2009 |