The Government was embarrassingly defeat by 55 votes – 181 to 126 – when the Lords backed proposals for a “lifeboat fund” to top up compensation awarded to the 125,000 pensioners whose pensions were lost from 1997 to 2005.
This year’s budget saw the Government increase funding for its Financial Assistance Scheme from £2bn to £8bn to award affected pensioners 80 per cent of their core benefits. Although pensioners whose companies went bust after 2005 are eligible for 90 per cent under the Pensions Protection Fund.
But last night’s victory is encouraging for pensioners who lost their savings before 2005 to receive the same 90 per cent minimum protection as those eligible for the Pensions Protections Fund.
Standard Life head of pensions policy John Lawson says: “It is a positive move as it sends the message to the House of Commons that this is a big issue which needs to be sorted out but I think it will be defeated in the Commons because of the big labour majority. The amount of money needed would be enormous but these people have been treated abysmally and the FAS needs to get its act together.”