Campaigners have welcomed a £2.9bn rescue package for 140,000 workers who lost their pensions when their companies went bust.
Campaigners have welcomed a £2.9bn rescue package for 140,000 workers who lost their pensions when their companies went bust.
Work and Pensions Secretary Peter Hain has set out plans to restore 90% of the value of their pensions.
Work and Pensions Secretary Peter Hain has set out plans to restore 90% of the value of their pensions.
That brings them in line with other workers covered by the Pensions Protection Fund (PPF).
That brings them in line with other workers covered by the Pensions Protection Fund (PPF).
The boost follows a sustained campaign from workers, and criticism from MPs, the Parliamentary Ombudsman and others.
The boost follows a sustained campaign from workers, and criticism from MPs, the Parliamentary Ombudsman and others.
Peter Hain said the money would deliver justice to workers "cruelly robbed" of their pensions "through no fault of their own".
Peter Hain said the money would deliver justice to workers "cruelly robbed" of their pensions "through no fault of their own".
NEW FAS WILL PROVIDE: 90% of expected pension, subject to £26,000 capPayment from scheme pension age, subject to lower limit of 60Some inflation protectionA tax-free lump sum where the scheme allows itThe ability to request an early payout on ill-health grounds The government says the settlement will benefit 130,000 workers already eligible for the Financial Assistance Scheme (FAS).
NEW FAS WILL PROVIDE: 90% of expected pension, subject to £26,000 capPayment from scheme pension age, subject to lower limit of 60Some inflation protectionA tax-free lump sum where the scheme allows itThe ability to request an early payout on ill-health grounds The government says the settlement will benefit 130,000 workers already eligible for the Financial Assistance Scheme (FAS).
It will also cover another 11,000 workers who are members of failed pension schemes belonging to solvent employers.
It will also cover another 11,000 workers who are members of failed pension schemes belonging to solvent employers.
The latter group had been excluded from the FAS.
The latter group had been excluded from the FAS.
Under the proposals, workers will now be entitled to 90% of their expected pension, and not the narrower "core pension" protected under the original terms of the FAS.
Under the proposals, workers will now be entitled to 90% of their expected pension, and not the narrower "core pension" protected under the original terms of the FAS.
We believe this represents a just and final settlement Peter Hain, Work and Pensions Secretary Payments will increase in line with inflation, and will be paid from each failed scheme's normal retirement age.
We believe this represents a just and final settlement Peter Hain, Work and Pensions Secretary Payments will increase in line with inflation, and will be paid from each failed scheme's normal retirement age.
In addition, workers will be able to draw a lump sum, if appropriate, and those who are unable to work because of ill-health will be able to apply for an early payout.
In addition, workers will be able to draw a lump sum, if appropriate, and those who are unable to work because of ill-health will be able to apply for an early payout.
Payments will be backdated to 14 May 2004 when the FAS was first announced.
Payments will be backdated to 14 May 2004 when the FAS was first announced.
Final details will be confirmed in the New Year, when the government will bring forward the necessary legislation to make the changes.
Final details will be confirmed in the New Year, when the government will bring forward the necessary legislation to make the changes.
Review
Review
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 FAS 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 FAS more generous.
The government promised to match any savings he identified.
The government promised to match any savings he identified.
The Young Review, now published, says bringing the residual pension assets under government control, coupled with the guarantee of extra state help, makes boosting the FAS to PPF levels affordable.
The Young Review, now published, says bringing the residual pension assets under government control, coupled with the guarantee of extra state help, makes boosting the FAS to PPF levels affordable.
This is brilliant news... I will now receive what I was due Peter Jackson, Pensions campaigner
This is brilliant news... I will now receive what I was due Peter Jackson, Pensions campaigner
It takes the government's total financial commitment to £12.5bn.
It takes the government's total financial commitment to £12.5bn.
"We believe this represents a just and final settlement," said Mr Hain.
"We believe this represents a just and final settlement," said Mr Hain.
"Although the government has been criticised over this matter, these are huge amounts and it is right that we have been able to maximise the return from residual assets in the schemes which collapsed so that the public purse has had value for money too," he added.
"Although the government has been criticised over this matter, these are huge amounts and it is right that we have been able to maximise the return from residual assets in the schemes which collapsed so that the public purse has had value for money too," he added.
'Brilliant news'
'Brilliant news'
Campaigner Peter Jackson, who lost his pension when the firm where he had worked for 41 years, ASW, went into receivership, said he was "delighted".
Campaigner Peter Jackson, who lost his pension when the firm where he had worked for 41 years, ASW, went into receivership, said he was "delighted".
ASW workers outside the European Court of Justice in LuxembourgUnder the original terms of the FAS, Mr Jackson, who met Mr Hain before Monday's announcement, would have been paid a pension worth between 10% and 12% of what he had expected.
ASW workers outside the European Court of Justice in LuxembourgUnder the original terms of the FAS, Mr Jackson, who met Mr Hain before Monday's announcement, would have been paid a pension worth between 10% and 12% of what he had expected.
"This is just brilliant news," he said.
"This is just brilliant news," he said.
"I will now receive what I was due, which is a huge difference to what I would have received if the government had not acted."
"I will now receive what I was due, which is a huge difference to what I would have received if the government had not acted."
Shadow pension minister Chris Grayling told the BBC he welcomed the announcement.
Dr Ros Altmann, who led the fight for compensation on behalf of the pension victims, also welcomed the changes.
"Finally we have won - it is unbelievable. I am delighted, these people really deserve it," she said.
"It is not 100%, it is not what the Parliamentary Ombudsman recommended, but it is pretty much on a par with the Pensions Protection Fund.
It will allow those affected to get their lives back," she added.
Shadow pension minister Chris Grayling paid tribute to Dr Altmann and the Pension Action Group.
"It's a real tribute to the efforts of all the campaign group who have fought up and down the country over the last few years," he said.
"It's a real tribute to the efforts of all the campaign group who have fought up and down the country over the last few years," he said.
"Well done to my counterpart, Peter Hain, whose clearly won a tough battle in government over the Treasury and over Gordon Brown, who didn't really want this package to go ahead," he added.
"Well done to my counterpart, Peter Hain, who's clearly won a tough battle in government over the Treasury and over Gordon Brown, who didn't really want this package to go ahead," he added.
The Community trade union, which took the government to the European Court of Justice over the issue, said it was a "massive victory" for workers.
The Community trade union, which took the government to the European Court of Justice over the issue, said it was a "massive victory" for workers.
"Christmas has come early... it's really good news," general secretary Michael Leahy told the BBC.
"Christmas has come early... it's really good news," general secretary Michael Leahy told the BBC.
"Peter Hain... realised that this needed to be sorted out and he's done that, so we congratulate him for that," he added.
"Peter Hain... realised that this needed to be sorted out and he's done that, so we congratulate him for that," he added.
Discrepancy
Discrepancy
The Financial Assistance Scheme (FAS) was designed to offer a safety net to people whose pension schemes collapsed between January 1997 and April 2005.
The Financial Assistance Scheme (FAS) was designed to offer a safety net to 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 its inception, the FAS was significantly less generous than the PPF.
Despite various concessions since its inception, the FAS was significantly less generous than the PPF.
Just under 3,500 people are currently receiving a payout from the FAS.
Just under 3,500 people are currently receiving a payout from the FAS.
The Parliamentary Ombudsman, Public Administration Committee and a High Court Judicial Review all criticised the terms of the FAS, and called on the government to offer greater compensation to the affected workers.
The Parliamentary Ombudsman, Public Administration Committee and a High Court Judicial Review all criticised the terms of the FAS, and called on the government to offer greater compensation to the affected workers.
Last week, Gordon Brown said he was confident the level of compensation for those reliant on FAS would be improved.
Last week, Gordon Brown said he was confident the level of compensation for those reliant on FAS would be improved.
His comments followed reports of clashes between the prime minister and the Treasury on one side and the Work and Pensions Secretary on the other
His comments followed reports of clashes between the prime minister and the Treasury on one side and the Work and Pensions Secretary on the other
But a Work and Pensions spokesman dismissed the reports, saying there had been detailed discussions.
But a Work and Pensions spokesman dismissed the reports, saying there had been detailed discussions.
Will you be affected by this announcement? You can send us your experiences using the form below:
Will you be affected by this announcement? You can send us your experiences using the form below:
