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Written question asked by Jenny Willott (Liberal Democrat) on Monday, 22 October 2007, in the House of Commons. It was due for an answer on Wednesday, 24 October 2007. It was answered by Mike O'Brien (Labour) on Monday, 29 October 2007 on behalf of the Department for Work and Pensions.

Financial Assistance Scheme

Question
To ask the Secretary of State for Work and Pensions what estimate he has made of how much would be needed on average in each of the next 50 years in (a) net present value and (b) cash sum terms in order for the Financial Assistance Scheme to pay 90 per cent. of the (i) core and (ii) expected pensions of all those eligible for support; and if he will make a statement.
Answer

The 'core' pension as defined by the financial assistance scheme standardises some pension features for ease of administration and to protect the public purse. For example, payments start from 65 rather than scheme pension age and no indexation is provided. The cash and NPV costs of paying 90 per cent. of core pension are in the following table and sum to approximately £10 billion in cash terms.We do not have the data to estimate accurately an 'expected' pension. Schemes that qualify for the financial assistance scheme have very different scheme rules, for example, on indexation and revaluation (particularly for pre-1997 pension accruals), and it is not possible to make precise estimates of these differences.In the Government response to the report by the parliamentary ombudsman on occupational pensions (Trusting in the Pensions Promise, June 2006), we estimated the total cost of meeting expected pensions at between £13 billion and £17 billion in cash terms to reflect this uncertainty.

90 per cent. core pension
Cash (£ million) Net present value (£ million)
2007 14 14
2008 36 34
2009 44 39
2010 44 37
2011 52 41
2012 65 48
2013 78 54
2014 90 59
2015 101 63
2016 112 66
2017 125 69
2018 142 74
2019 155 76
2020 166 77
2021 178 77
2022 193 79
2023 204 79
2024 214 78
2025 227 78
2026 239 77
2027 250 76
2028 262 75
2029 271 73
2030 276 71
2031 282 68
2032 287 65
2033 290 62
2034 290 59
2035 290 55
2036 287 51
2037 284 48
2038 280 45
2039 274 42
2040 267 38
2041 259 35
2042 251 32
2043 242 29
2044 233 27
2045 223 24
2046 213 22
2047 203 20
2048 193 18
2049 183 16
2050 172 14
2051 162 13
2052 152 11
2053 142 10
2054 132 9
2055 122 8
2056 112 7
2057 103 6
Notes:
1. All figures are displayed in £ million, rounded to the nearest £1 million.
2. Net present value is calculated according to HM Treasury Guidance.

Secondary information

Type
Written question
Reference
160738; 465 c755-7W
Session
2006-07
Subjects
Financial assistance scheme Pensions
Link
View this Written question on www.publications.parliament.uk