DEPARTMENT FOR WORK
AND PENSIONS News Release issued by The Government News Network on
17 July 2007
Minister for
Pensions Reform Mike O'Brien today pledged that the
Government would match any additional funds identified by the
Assets Review for people who lost their pensions.
The interim findings of the Assets Review, led by Andrew Young of
the Government Actuary's Department, were published on Monday.
The review reported there are £1.7bn of assets in occupational
pension schemes that qualify for help from the Financial
Assistance Scheme (FAS). It said that the current practice of each
scheme purchasing annuities for their members, which are then
topped up by the Government, may not offer the best use of these assets.
Following today's announcement, the Government hopes that
schemes will now stop expending scheme assets on annuities, and
urges trustees to cooperate in order to get a better outcome for
members. Alternative approaches which could increase the value
include bulk purchase of annuities and pooling of assets in a
single fund.
Mike O'Brien said:
"The Government believes that the cost of extending the FAS
towards 90 per cent can now be met by making better use of the
assets remaining in pension schemes, matched by a further
contribution from Government
"We will need the cooperation of every pension scheme to get
there. We are committing today to match the extra funds that the
review identifies with a goal of moving towards 90 per cent of
expected core pension for all recipients.
"Those extra funds will be based on the amount of assets
remaining in schemes. Trustees must continue to act in their
members' best interests, but we hope they will now take the
view that those interests may not be served by expending scheme
assets on annuities.
"The Government will match the extra funds that the Young
Review identifies as and when these are released by trustees - and
we expect this to be achieved as quickly as possible."
Notes To Editors
1. A copy of the Assets Review interim
report is available at http://www.dwp.gov.uk/pensionsreform/fas-asset-review.asp
2. The report concentrated on identifying the value of assets
in FAS schemes, their ownership and stewardship; potential uses of
these assets and whether there are options to increase the value;
other non-tax sources of funding; and the key issues relating to
solvent employers.
3. The Government has announced an
extension of the FAS so that all 125,000 people who lost their
pensions will receive 80 per cent of their expected core pension.
It has committed £8bn in cash terms towards the FAS, or £1.9bn in
net present value.
4. The review intends to undertake further
data collection and consultation over the summer. Its final report
will be published before the end of the year.
Website: http://www.dwp.gov.uk