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'Greater help' for lost pensions Pension rescue scheme gets £2.9bn
(about 2 hours later)
Some 125,000 workers who lost pensions when their employers went bust before 2005 are to be given greater help, the government is expected to announce. Campaigners have welcomed a £2.9bn rescue package for 140,000 workers who lost their pensions when their companies went bust.
Measures will bring them in line with other workers covered by the Pensions Protection Fund, set up two years ago. Work and Pensions Secretary Peter Hain has set out plans to restore 90% of the value of their pensions.
The move will see 90% of the value of their pensions restored. That brings them in line with other workers covered by the Pensions Protection Fund, set up two years ago.
Work and Pensions Secretary Peter Hain is due to make a statement to the Commons and a government report into the issue will also be published. The boost follows a sustained campaign from workers, and criticism from MPs, the Parliamentary Ombudsman and others.
Mr Hain told BBC Radio Four's Today programme that some people had been "cruelly robbed". Peter Hain said the money, which will mainly come from taxpayers, will deliver justice to workers "cruelly robbed" of their pensions "through no fault of their own".
The settlement will benefit 130,000 workers already eligible for the Financial Assistance Scheme (FAS) and another 11,000 workers who are members of failed pension schemes belonging to solvent employers.
Look, I don't say we have done this as quickly as everybody would have liked Peter HainWork and Pensions SecretaryLook, I don't say we have done this as quickly as everybody would have liked Peter HainWork and Pensions Secretary
In March, the government's directing actuary Andrew Young was asked to report on the best way to use the assets of failed company pension schemes to make the old scheme more generous.In March, the government's directing actuary Andrew Young was asked to report on the best way to use the assets of failed company pension schemes to make the old scheme more generous.
'Too bureaucratic''Too bureaucratic'
The Financial Assistance Scheme (FAS) is the official rescue net for people whose pension schemes collapsed between January 1997 and April 2005. The Financial Assistance Scheme (FAS) is the official safety net for people whose pension schemes collapsed between January 1997 and April 2005.
The Pension Protection Fund (PPF) covers members of pension schemes that have gone under since then.The Pension Protection Fund (PPF) covers members of pension schemes that have gone under since then.
Despite various concessions since it was first designed, the FAS remains significantly less generous than the PPF. Despite various concessions since being designed, the FAS was significantly less generous than the PPF.
It pays out 80% of a worker's "core pension", subject to a cap of £12,000 - due to be raised to £26,000 - and has no inflation proofing. It paid out 80% of a worker's "core pension", subject to a cap of £12,000 - due to be raised to £26,000 - and had no inflation proofing.
If this is a meaningful package that finally sorts this out, it will be really, really good news Ros Altmann, Pensions Action GroupIf this is a meaningful package that finally sorts this out, it will be really, really good news Ros Altmann, Pensions Action Group
In contrast, the PPF pays 90% of a more generous pension entitlement, again subject to a £26,000 cap and has some inflation proofing.In contrast, the PPF pays 90% of a more generous pension entitlement, again subject to a £26,000 cap and has some inflation proofing.
Peter Jackson had worked for the same company for 41 years when it went into receivership and his pension was lost.Peter Jackson had worked for the same company for 41 years when it went into receivership and his pension was lost.
He told the BBC: "I was facing the possibility of getting 10 to 12% of my original pension. He told the BBC: "I was facing the possibility of getting 10% to 12% of my original pension.
"We decided that wasn't good enough and with the help of the union Community we took them on and went all the way to the European court.""We decided that wasn't good enough and with the help of the union Community we took them on and went all the way to the European court."
It was after Mr Jackson's court battle that the PPF and later the FAS were created.It was after Mr Jackson's court battle that the PPF and later the FAS were created.
Long waitLong wait
The FAS has been criticised by pension campaigners for being too bureaucratic and not paying out enough.The FAS has been criticised by pension campaigners for being too bureaucratic and not paying out enough.
But one leading critic said the government may finally have acknowledged that the current situation was "unacceptable".But one leading critic said the government may finally have acknowledged that the current situation was "unacceptable".
"If this is a meaningful package that finally sorts this out, it will be really, really good news," said Ros Altmann, head of the Pensions Action Group."If this is a meaningful package that finally sorts this out, it will be really, really good news," said Ros Altmann, head of the Pensions Action Group.
"I hope that we will be in a position to say this at last might deliver real hope to the people who have been so wronged.""I hope that we will be in a position to say this at last might deliver real hope to the people who have been so wronged."
Mr Hain admitted some people had waited a long time without any help after schemes had collapsed. Mr Hain admitted to BBC Radio 4's Today programme that some people had waited a long time without any help after schemes had collapsed.
"Look, I don't say we have done this as quickly as everybody would have liked. I'm not pretending that," he said."Look, I don't say we have done this as quickly as everybody would have liked. I'm not pretending that," he said.
"But I do think people will see that the announcement made today does address this issue, providing much needed justice for these pensioners.""But I do think people will see that the announcement made today does address this issue, providing much needed justice for these pensioners."
Last week, Prime Minister Gordon Brown said he was confident the level of compensation for those reliant on FAS would be improved.Last week, Prime Minister Gordon Brown said he was confident the level of compensation for those reliant on FAS would be improved.
The latest announcement of more financial help comes after reports of clashes with the prime minister and the Treasury on one side and the Work and Pensions Secretary on the other.The latest announcement of more financial help comes after reports of clashes with the prime minister and the Treasury on one side and the Work and Pensions Secretary on the other.
But a Work and Pensions spokesman has dismissed the reports, saying there had been detailed discussions.But a Work and Pensions spokesman has dismissed the reports, saying there had been detailed discussions.