The Government Actuary’s Department directing actuary Andrew Young will lead the review, which will be advised by a panel of “leading experts”.
Reviewers will provide an initial view in the summer and a full
report by the end of the year.
It will look at whether better use can be made of assets in
winding-up pension schemes, and whether other sources of non-public
funding, which have not already been allocated, could boost
assistance levels further.
The team has already started meeting key stakeholders and
will contact others shortly to invite their contributions.
The extension to the Financial Assistance Scheme announced in the
Budget increases the funding commitment from £2.3bn in cumulative
cash terms, to £8bn. This equates to more than doubling the scheme in
net present value terms, from £830m to £1.9bn.
The Government says the increase means that all 125,000 people who lost money when their schemes started winding up will receive support equivalent to 80 per cent of their core pension rights, up to £26,000 per year.
But the FAS has been criticised as inadequate by pensions campaigners. Last week the Tories failed to force through an ammendment to the Pensions Bill which would set up a lifeboat fund to top up compensation for the pensions victims up to Personal Protection Fund levels.
Minister for pensions reform Purnell said: “The Government is to extend the Financial Assistance Scheme to cover members of schemes that began winding up between 1st January 1997 and 5th April 2005, where a compromise agreement is in place -and where it would have forced the sponsoring employer into insolvency if trustees had demanded that the company honour its pension promises in full. It says this will help an estimated 8,000 people.
“The extension of the Financial Assistance Scheme announced in the Budget means that affected people’s pensions will be topped up to 80 per cent of their core pension expectation. We believe this is the right amount for the taxpayer to fund – but we are committed to looking at other sources of non-public funding.”