Financial Advice UK - Pensions News - Government pledges to help those who lost pensions

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Pensions News - Last Updated Friday 20th July 2007

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Government pledges to help those who lost pensions

Friday 20th July 2007

The minister for pensions reform, Mike O'Brien, has announced a government pledge to match any additional funds located by the Assets Review for people who lost their pensions.

The Assets Review has reported that there are £1.7 billion in assets in occupational pension schemes that qualify for help from the Financial Assistance Scheme (FAS).

Current practice is for each scheme to purchase annuities for its members, which are then added to by the government, but the Review said that this might not be the best use of the assets.

The government is hoping that schemes will stop spending assets on annuities, and is encouraging trustees to cooperate to achieve a better result for members.

MR O'Brien said: "The government believes that the cost of extending the FAS towards 90 per cent can now be met by making better use of the assets remaining in pension schemes, matched by a further contribution from government

"We will need the cooperation of every pension scheme to get there.

"We are committing today to match the extra funds that the review identifies with a goal of moving towards 90 per cent of expected core pension for all recipients.

"Those extra funds will be based on the amount of assets remaining in schemes.

"Trustees must continue to act in their members' best interests, but we hope they will now take the view that those interests may not be served by expending scheme assets on annuities."