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Pensions: Financial Assistance Scheme

Volume 464: debated on Friday 19 October 2007

To ask the Secretary of State for Work and Pensions what estimate he has made of (a) the projected cost of the Financial Assistance Scheme in each of the next 30 years and (b) the additional funding required to meet his commitment on match-funding following the publication of the interim Young report. (152561)

The information is as follows.

(a) The following table shows the estimated total annual cash cost over the next 30 years of providing FAS at the level announced by the Chancellor on 21 March 2007.

Cash cost (£ million)

2008-09

40

2009-10

53

2010-11

60

2011-12

64

2012-13

68

2013-14

78

2014-15

89

2015-16

102

2016-17

113

2017-18

122

2018-19

130

2019-20

135

2020-21

145

2021-22

159

2022-23

168

2023-24

176

2024-25

185

2025-26

195

2026-27

203

2027-28

214

2028-29

223

2029-30

228

2030-31

234

2031-32

238

2032-33

240

2033-34

241

2034-35

241

2035-36

240

2036-37

238

2037-38

234

Note:

Costs are rounded to the nearest £1 million and are expressed in 2006-07 prices

(b) The Young review will identify what additional value can be attained from the assets in FAS pension funds. The Government will set out the details of its approach to match funding once the Young review has been published.

To ask the Secretary of State for Work and Pensions what the maximum percentage payment under the Financial Assistance scheme is of the pension lost; and whether the payment is dependent upon the level of contributions made. (157364)

Payments from the Financial Assistance scheme (FAS) reflect 80 per cent. of the core pension an individual could have expected to receive from their pension scheme. Payments are currently subject to a cap of £12,000 a year and as previously announced we are raising the cap to £26,000 a year.

The Young Review of Pension scheme assets is expected to report back in November, and we have already committed to match the additional value it identifies with the goal of moving towards 90 per cent. of expected core pension for all recipients (subject to the cap).

The expected core pension will reflect contributions made to the pension scheme by the sponsoring employer and the scheme member.