Pension victims who lost their savings when company schemes collapsed won a victory in the House of Lords last week but the amendment may still be defeated in the Commons.
The Government was defeated by 55 votes – 181 to 126 – when peers backed proposals for a lifeboat fund to top up compensation awarded to the 125,000 victims who lost their pensions from 1997 to 2005. The amendment now goes back to the Commons for a third reading of the Pensions Bill.
This year’s Budget saw the Government increase funding for the Financial Assistance Scheme from £2bn to £8bn so pension victims can get 80 per cent of their core benefits. But people whose company schemes went bust after 2005 are eligible for 90 per cent of their entitlement under the Pension Protection Fund.
Pension consultant Ros Altmann says last week’s victory is encouraging for people who lost their savings before 2005 and are looking to receive the same minimum protection as those eligible for the PPF.
She says: “I am absolutely delighted that the amendments were voted through but we now have to get the Commons’ vote as well. I hope we can get the Government to understand that they need to update the FAS urgently because it is not working. FAS members are left waiting while PPS members are all paid as though they have always been in the PPS.
“It would cost an extra £20m a year, which is nothing to the Department for Work and Pensions. I am convinced they will have to do it in the end, so why not do it now and start rebuilding confidence in pensions?”
Standard Life head of pensions policy John Lawson says: “These people have been treated abysmally and the FAS needs to get its act together. 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.”