It's an announcement that will no doubt bring a tear of nostalgia to the eyes of many in the pensions industry throughout the land: the Financial Assistance Scheme (FAS) will close its doors to new applications from pension schemes on 1 September 2016.
FAS was set up in 2005 by the Government as a lifeboat fund to help people who were at risk of losing their pensions due to their pension scheme's sponsoring employer becoming insolvent before 2005, at which time the Pension Protection Fund (PPF) was created. FAS makes compensatory payments to members to ensure that the value of their benefits are 'topped-up' to a Government-stipulated level. It is now managed by the PPF.
For a pension scheme to be eligible for support from FAS, it must be a defined benefit scheme that has either:
- begun winding up between 1 January 1997 and 5 April 2005 with an insolvent employer; or
- started to wind up after 5 April 2005 but is ineligible for help from the PPF due to the employer becoming insolvent before that date.
Certain conditions also apply in relation to the scheme's principal employer, including that it has become insolvent, or entered into a compromise agreement to avoid insolvency. Further details on pension schemes' eligibility for FAS can be found here. Underfunded schemes which began winding up after 5 April 2005 would and can apply for assistance from the PPF.
MacRoberts are proud to be involved in helping a number of pension schemes be accepted into FAS, acting either as an independent trustee or as a legal adviser to the trustees of schemes. As a result, hundreds of pension scheme members received an increased pension where they may otherwise have lost out completely.
FAS has encouraged trustees, advisors, former trustees and/or former advisors of any pension scheme they believe may be a qualifying scheme but not yet notified to it to do so as soon as possible.
If you are an advisor or a trustee who believes that a scheme with which you are involved may be eligible for FAS (or indeed PPF) protection, we'd be delighted to discuss this with you.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
