Today the Government published its response to the consultation on the draft Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2008 (see Aries article), which closed on 9 May. The final draft of the Regulations, incorporating a few minor amendments, was laid on 18 June for Parliamentary approval (see also html version).

The draft Regulations:

• provide for early reduced payment of assistance from the FAS where a qualifying member is unable to work due to ill health. They also allow qualifying members of certain pension schemes which started winding-up with solvent employers to qualify for help from the FAS.
• include a number of measures aimed at speeding up payments to members, as well as provisions to protect the value of FAS scheme assets and measures to allow the Board of the PPF to be more closely involved in the development of the FAS.
• remove the option for FAS qualifying members to be reinstated into the State Additional Pension.

An accompanying DWP announcement invites members who believe they may be eligible for an early ill health payment to register their interest with the FAS Operational Unit now. Details of the eligibility criteria are available.

Today's announcement follows the coming into force on 4 June of The Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2008 (SI 2008/1432). These Regs introduce the first key elements of the reforms to the FAS announced on 17 December 2007, allowing payment at 90% of a qualifying member's accrued pension (subject to the cap), instead of 80%, and payment from a member's normal retirement age (or age 60 if normal retirement age is below 60). Where relevant, payments will be made in relation to past periods from the later of the member's normal retirement age or 14 May 2004, the date the FAS was first announced. A transitional provision protects a beneficiary who would be adversely affected by the new regs from suffering a reduction in payment.

The DWP has promised to start calculating payments in line with these changes immediately and aims to reassess all relevant member and survivor payments by the end of August. The Government conducted a very brief consultation on a draft of these regs in March (see Aries article).

When calculating revised FAS payments under these Regulations, the DWP will be using the revised annuity factors that were proposed at the same time in March. The Government has published its response to the consultation on those revised factors.

Trustee update on halting annuitisation

The Financial Assistance Scheme (Halting Annuitisation) Regulations 2007 (SI 2007/2533) came into force on the 26 September 2007. Those Regulations prohibited the purchase of annuities and any agreement to purchase annuities for a period of 9 months, unless the trustees had entered into a binding commitment to purchase before 26 September 2007 or the purchase had been approved by the FAS scheme manager.

A recent FAS update warns that although this prohibition period is due to expire on 25 June, it is to be extended indefinitely (and with retrospective effect to 26 June), via amendments to the current Pensions Bill. As a result, trustees of FAS qualifying pension schemes which have not yet been fully wound up must not purchase, or enter into any agreements to purchase, annuities on behalf of FAS qualifying members after 25 June 2008 without the approval of the FAS scheme manager.