It was no great surprise that the Government found a way of booting out the House of Lords amendments to its Pensions Bill this week.
If they'd gone through, they would have secured prompt financial assistance for thousands of people who lost their pensions when their companies went bust, many of whom are sick and impoverished, or being forced to work beyond their planned retirement in spite of having amassed a lifetime's savings.
However, for the majority of the 125,000 affected by this scandal, this was in fact quite a good week. Since the new Secretary of State for Work and Pensions, Peter Hain, took the reins a few weeks ago, the rhetoric has changed.
While the Government used some sneaky politicking to get rid of the Pensions Bill amendments this week – which would have put an end to this crisis once and for all – Mr Hain also issued a statement saying he was confident that the Government could increase payments from its Financial Assistance Scheme (FAS) to 90 per cent (from the 80 per cent it currently pays), given a little more time. Those who have been working close to him insist that he is taking this crisis seriously – and that he has made it a priority to sort it out.
Unfortunately, a change in the rhetoric is not enough for the 10,000 or so people who are already at or past retirement. Many died before ever seeing a penny of the pensions they spent their life saving up for, while others are struggling to manage on the pittance the FAS is paying them.
So far, the FAS has started making payments to just 1,300 people – and in most cases, they are only receiving the interim emergency benefit, equivalent to just 60 per cent of the pension they were due (without any inflation-proofing). In some cases, pensioners who are seriously ill are being forced to continue working because they can't make ends meet.
Perhaps I'm naive, but I am actually optimistic that the victims of this scandal who are yet to retire will eventually receive 90 per cent of what they were due – hopefully with inflation-proofing and a much higher cap (rather than the £12,000 a year maximum that applies at the moment).
Mr Hain accepted the findings of the Andrew Young report published this week – which showed how the additional necessary funds could be found without using any more taxpayers' money – and appears committed to exploring the possibility of using unclaimed assets in life insurance policies, as well as changing the requirement of bust pension funds to buy annuities (which is wasting millions).
It now looks increasingly likely that the Government will eventually pool all the remaining assets in these funds, and will turn the FAS into something that resembles the Pension Protection Fund (which pays much more generous benefits). But all this will take time to bring about. Using unclaimed assets will require new legislation, for a start, while pooling pension funds is also a bureaucratic headache.
In the meantime, however, the Government must put some interim measures in place to provide instant financial assistance for those who are suffering now. One of the amendments, which was kicked out of the Commons this week, would have given the authority for the trustees of the affected pension funds to use the remaining assets in their schemes to start paying out immediately.
Why, at the very least, can the Government not resurrect this – or simply set up an emergency fund (money that it could get back from the schemes at a later date) to help those who are most in need?
Everyone appreciates that it will take time to establish a long-term lifeboat fund, but there is so much that could be done now. If Mr Hain wants to prove he is serious about clearing up this scandal, he must act immediately.Reuse content