The Financial Assistance Scheme

The Financial Assistance Scheme (FAS) is a scheme set up by the government to provide a minimum level of benefits to members of qualifying pension schemes who would otherwise lose all or part of their pension benefits because their pension scheme wound up when underfunded. The FAS closed to Notification and Qualification of new schemes on 1 September 2016. Members who are in receipt of, or with a deferred entitlement to receive, assistance payments from the FAS are not affected by the closure.

In general, the FAS covers schemes that are not eligible for the Pension Protection Fund (PPF) because before 6 April 2005 either:

•
the scheme went into winding up, or
•
the scheme’s sponsoring employer became insolvent

The PPF has administered FAS since 10 July 2009 and has issued various explanatory materials for trustees and members on the FAS website and FAS Member website, including:

•
a comprehensive list of FAQs and
•
a useful glossary of FAS and pensions terminology

Generally, underfunded schemes that started to wind up on or after 6 April 2005 should look to the PPF rather

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Pensions News

PSIG held back by lack of industry funding

Law360, On 20 December 2024, the Pensions Scams Industry Group (PSIG) expressed that it will not be able to play a bigger role in raising awareness without funding from the retirement sector.

Pensions Ombudsman orders former director of trustee company to pay £9.7m to two pension schemes (Dalriada Trustees (PO-16266))

Pensions analysis: The Pensions Ombudsman (PO) has upheld a complaint brought by Dalriada Trustees Ltd (Dalriada) and others of multiple instances of breach of trust and maladministration against Ecroignard Trustees Ltd (Ecroignard) and a Mr Shroff, a former director of that company. Ecroignard has been wound up—although its ultimate dissolution has been suspended until 2028. Written by Paul Carney, a partner at Shoosmiths LLP.

PPF responds to Work and Pensions committee regarding the indexation of compensation relating to pre-1997 benefits

The Pension Protection Fund (PPF) has responded to the Work and Pensions Committee letter dated 17 December 2024 regarding the impact of increasing PPF and Financial Assistance Scheme (FAS) payments. PPF’s response includes revised figures detailing the potential impact of indexing pre-97 compensation for PPF members and FAS payments. The updated calculations, based on the 2023/24 annual report and accounts, encompass various scenarios including prospective and retrospective changes to indexation, removal of the 90% factor for deferred members, and alterations to FAS assistance increases. The PPF emphasises that the cost implications are sensitive to market conditions, particularly nominal yields. The data presented includes comprehensive breakdowns of the effects on PPF assets, liabilities, funding levels, and reserves under different indexation scenarios, providing a nuanced view of the financial implications of potential policy changes.

PSIG announces consultation outcomes and future plans

The Pension Scams Industry Group (PSIG) has revealed the results of its recent consultation, ‘Evolution or Extinction’ which sought to determine the organisation's future direction. The feedback indicates strong industry support for PSIG's work, particularly its Code of Good Practice. Respondents called for more proactive measures, including increased lobbying efforts, an interactive information hub, and expanded services such as training and accreditation schemes. However, despite the demand for enhanced services, the industry has not committed to providing funding for PSIG's operations. Looking ahead to 2025, PSIG plans to publish an updated Code of Good Practice, maintain its involvement with the Pension Scams Action Group, and continue offering the Pension Scams Industry Forum. The group will review its options and present a proposal for future operations later in the year.