The Government finally gave some new hope yesterday to the thousands of people who lost their pensions when their companies went bust, claiming it was confident it would be able to replace closer to 90 per cent of their lost savings, rather than the 80 per cent, which its Financial Assistance Scheme (FAS) offers.
The pledge, made by the Secretary of State for Work and Pensions, Peter Hain, came in response to the long-awaited publication of the government-commissioned review of the FAS, written by Andrew Young of the Government Actuary Department (GAD). Mr Young's interim report concluded that the pensions lifeboat was eroding the remaining assets in the bust pension schemes, supporting opposition claims that more money could be returned to scheme members by dropping the requirement for the schemes to buy annuities. It suggested that pooling assets from all defunct schemes may secure more money.
The report dismissed suggestions that life insurance companies' inherited estates should be used to top up the shortfall. However, it left the door open to using unclaimed life insurance policies as a way of ensuring all those affected get paid at least 90 per cent of their expected pension - a proposal that was successfully put into place in Ireland.
"These findings are very encouraging," said Mr Hain. "They show there are still significant amounts of money available in the collapsed pension schemes which, if managed carefully, could boost assistance for people who lost their pensions. We believe we will be able to move the 80 per cent guarantee from the taxpayer further towards 90 per cent." However, the Secretary of State said it was important that the Government was certain that the proposals could be delivered before it committed to them, indicating it would wait for the final report later this year.
MPs will vote today on a string of amendments to the Pensions Bill which, if passed, would enforce most of the Young report's preliminary recommendations immediately. The Government has said it plans to vote down the amendments, with Labour MPs likely to be under a three-line whip.
Dr Ros Altmann, a former Government pensions adviser who now fights on behalf of those who lost their pensions, said that MPs should examine their consciences before voting against the Bill. Danny Alexander, the Liberal Democrat spokesman for work and pensions, said: "The 125,000 victims of collapsed pensions have been waiting far too long for a fair settlement. I hope that Labour MPs will join with Liberal Democrats and other parties and do the right thing."Reuse content