Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2006

rose to move, That the draft regulations laid before the House on 15 November be approved [First Report from the Statutory Instruments Committee]. The noble Lord said: My Lords, these regulations will among other things significantly extend the scope of the financial assistance scheme announced in May’s White Paper, Security in Retirement: Towards a New Pensions System. This increases the Government’s commitment to the FAS to £2.3 billion, and means that the FAS will now help about 40,000 people who have lost significant amounts of occupational pension. The regulations extend eligibility for the FAS to members of qualifying pension schemes who were within 15 years of their scheme’s normal retirement age on 14 May 2004. Instead of helping only those who were within three years of normal retirement age, as before, the FAS will now top up to about 80 per cent the pensions of those who were within seven years of normal retirement age on 14 May 2004. Those between seven and 15 years from normal retirement age, who can more reasonably be expected to supplement their retirement income for the rest of their working lives, will be considered for a top-up to about 65 per cent of their expected core pension, and 50 per cent if they are between 12 and 15 years from their normal retirement age. Much criticism of the FAS has focused on the number of people whom we are currently paying. However, one reason for this is that the FAS payments normally begin at 65, so the vast majority of potentially eligible members have yet to attain this milestone. However, some people can join the FAS before 65, and they are expected to be among the first to benefit from the extended scheme. The terminally ill and survivors of those who would have been eligible under the extended scheme can be paid regardless of their age, and I expect that some widows will become eligible for consideration as soon as these regulations come into force. All being well, I expect we will begin to make payments to widows under these regulations before Christmas. The amendments we are proposing also bring additional schemes into the FAS. We have been made aware of some pension schemes that are currently excluded from the FAS because their employer has not had a formal UK insolvency event but that are, to all intents and purposes, insolvent. We are determined to ensure that schemes that meet all the rest of the FAS scheme’s qualifying criteria are not excluded on a technicality. This is why these regulations will allow a scheme to qualify for the FAS where an overseas insolvency event substantially corresponds to one that the FAS already accepts in the UK for the purposes of qualification, or where the employer associated with a scheme has liabilities that exceed its assets and cannot pay its debts as they fall, or have fallen, due. In both cases, the scheme manager will need to be satisfied that the relevant employer is unlikely to continue as a going concern. These amendments demonstrate our desire to define insolvency as widely as possible in order to bring schemes and their members into the FAS. They do not affect our oft-stated belief that ongoing solvent employers remain responsible for making good their pension promises to members. As already touched on, the regulations also introduce a number of amendments linked to the calculation of FAS payments and additional review and appeal rights linked to the determination of terminal illness for FAS purposes. These regulations ensure that the FAS continues to operate effectively and provides assistance to more of those scheme members who face the most significant losses. In my view these regulations are compatible with the European Convention on Human Rights. I beg to move. Moved, That the draft regulations laid before the House on 15 November be approved [First Report from the Statutory Instruments Committee].—(Lord Hunt of Kings Heath.)