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Occupational Pensions

That was very telling and memorable evidence, as was other evidence that we gathered from people directly affected by what happened. The Government have responded by saying that they do not accept that there was maladministration and that they are not liable. They have made it clear that they would like to help, if possible, although they will not provide a compensation package because the problem is not their fault. It was in that spirit that the Government introduced the FAS and then, as time went by, the extension to it. The Government have written to hon. Members to make it clear that the existing scheme is working very well—that it is doing its job and helping people—but it is worth explaining why it is nothing like a compensation package. I do not want to go into the costs that have been cited for either a full compensation scheme or the FAS, as they are much disputed. Instead, I shall list some reasons why the FAS is not the package that is required. I begin by stressing that financial assistance under the scheme is not paid to many people. More than 10,000 people past pension age have been affected by the problems that have been set out, but scarcely more than 400 have been paid anything under the FAS. Most of those affected are not sure when, or if, they will get help; meanwhile, they continue to suffer the consequences of what went wrong. In addition, the Government have overstated or exaggerated the amount that people will get under the scheme. They will not get 80 per cent. of the pension that they originally expected: instead, they will get only 80 per cent. of what is called the core pension, which is much lower. Among other reasons, that is because the FAS excludes inflation linking, has no tax-free lump sum and does not start until wind-up is finished. Further, the whole FAS payment is taxed, whereas the scheme pension would have a tax-free lump sum. The member not only receives far less pension but pays more in tax. Members who expected to retire at scheme pension age have to wait until age 65 and the conclusion of wind-up. There is no inflation linking. The value of the payments from the financial assistance scheme will decline over time. Within 10 years, the value will be cut by more than 20 per cent. in real terms. The £12,000 pension cap is too low and is not inflation-linked. The real value of the cap will wither and take away much more of people’s pension than currently appears from the headline figures.