Trustees of schemes that have qualified for the Financial Assistance Scheme have been banned from buying annuities for their members by the Department of Work and Pensions.
FAS-qualifying schemes will be stopped from buying annuities for nine months from September 26 to give the DWP time to work through the findings of the Young review which looked at how to use assets in these schemes to best effect.
Annuities can still be bought where trustees have already entered into a binding agreement for their purchase or in circumstances where the FAS scheme manager considers it appropriate for a scheme to buy annuities for its members.
Applications to purchase annuities will be considered on a case-by-case basis and guidance has been issued for trustees.
Pensions reform minister Mike O’Brien says: “The Young review concluded that making better use of the assets in the FAS-qualifying schemes could boost financial assistance further. Options include bulk-buying annuities or pooling the available assets in one fund.
“Halting annuitisation will allow the next stage of this work to take place and we need the full cooperation of trustees to achieve this. The Government has committed to match any additional funds generated by the Young review to increase FAS assistance.”
First Actuarial director Alan Smith says: “This does rather beg the question that if annuities are not good value for these schemes, how can they be good value for any other schemes?”