Compensation Amendment Added to Pensions Bill

More savers whose pension schemes collapse should be eligible for compensation through upcoming legislation, the government said yesterday.

According to the Department for Work and Pensions (DWP), the Pensions Bill will be amended to allow members of recently-failed schemes such as Desmond and Sons in Northern Ireland to have some of their savings reimbursed.

Previously, savers in these schemes had been left out of pocket, due to the funds not being included within the existing Financial Assistance Scheme (FAS) and its replacement, the Pension Protection Fund (PPF). This was because the schemes' sponsoring employers became insolvent at an unusual time, before the FAS cut-off of 5th April 2005, but before the PPF came on-line the following day.

The government's own estimates show that around 450 will be aided by the amendment.

Pensions minister Mike O'Brien said: "People in schemes such as Desmond and Sons did the right thing and saved for their retirement. So I am delighted that we’re extending FAS assistance to include them."

Speaking to the Financial Times following the announcement of the amendment, independent pensions specialist Ros Altmann commented: "It is good news. They slipped into the Pensions Bill legislation that provision to now include people who did not qualify to get assistance."