Trustees' cooperation vital to FAS payment drive

Minister for Pensions Reform Mike O'Brien has called on trustees to cooperate with measures to speed up Financial Assistance Scheme (FAS) payments to people aged 65 and over.

The payment process is to be simplified to get around delays caused by trustees not applying for FAS "initial payments" to top up interim pensions paid by the winding up schemes. There should be no good reason for trustees to not ensure that eligible members receive FAS benefits.

Payments at 80 per cent of expected core pension (subject to a cap) can be made to eligible members of winding up schemes in one of three ways:

The FAS will pay 80 per cent of core expected pension in full to members of winding up schemes, even if no interim pension is being paid by the scheme itself. This removes the expectation of pension payment from schemes still in wind up.

Where trustees wish to pay interim pensions in line with scheme funding positions, the FAS can top these up to 80 per cent as before.

Trustees can pay the 80 per cent from the assets available in their scheme if they feel this is appropriate, taking into account their duty to act in the best interests of their scheme members - with payments to eligible members guaranteed in the longer term by the taxpayer. Trustees should contact the FAS unit for help to calculate payments.

Minister for Pensions Reform Mike O'Brien said: "We are determined to get help to people who are entitled to money now and we need the cooperation of trustees of winding up schemes to achieve this.

"Some trustees have been very helpful. However, the response of a number of trustees so far has been disappointing. Some 200 schemes in wind-up have not even applied for initial payments for members.

"The FAS has been working closely with trustees to obtain the applications and data needed. We know that some trustees may have reasonable grounds for not applying for initial payments, such as the scheme being close to wind-up or members not yet having reached 65.

However, we believe there is scope for more schemes to request initial payments.

"The greater flexibility we are announcing today means that there should now be no good reason for trustees not to apply for FAS payments, or alternatively to pay benefits to eligible members at FAS levels themselves."

Requests for the FAS to pay 80 per cent of core expected pension in its entirety to members of winding up schemes should only be made by trustees where they are confident that final FAS payments would be expected once the scheme has completed winding up.

To receive FAS help, trustees of qualifying schemes need to apply for payments, tell the FAS about people who are approaching or over 65, and return information including details on how much pension members had accrued within their scheme.

Where schemes wish to make payments at 80 per cent levels themselves, the FAS unit will support trustees to calculate such payments.

Ongoing meetings with trustees are having a positive effect upon applications for initial payments. Since April, this year, the FAS unit has met with 14 trustees representing 393 of the 667 qualifying schemes.