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Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2008

My Lords, it was at short notice that this business was slipped in last Thursday afternoon for discussion today, particularly given the long and sorry history of the Financial Assistance Scheme. I know that the Minister is busy, but he has the resources of the department behind him. Those of us on the opposition Benches, who are obviously also dealing actively with the Pensions Bill, find it hard work to have things done at such short notice. I know that the Government clearly want to get this done before the Recess, but the Recess dates have been known for many months. As the Explanatory Memorandum makes clear, this set of regulations makes, "““provision for further elements of the package announced in December 2007””—" as the Minister said— "““such as early access to assistance on ill health grounds. There will be further Regulations to deliver the remaining parts of the package to move the FAS scheme to a position where assistance payments are calculated on a basis which is broadly comparable to that of the Pension Protection Fund””." In normal circumstances, ill-health payments—or what would have been early retirement due to ill health—would have been subject to the rules and guidelines of individual schemes and trustee discretion. Why have the Government opted for an arbitrary figure? All I could see in the Explanatory Memorandum was that they think it is ““appropriate””. The arbitrary figure of five years before normal retirement age could leave some very ill people worse off. Actuarial reductions would not be made in all cases under normal circumstances in those schemes. The House will therefore see that FAS members could be worse off under the current proposals. A model of how a compensation package should be administered in the form of the Pension Protection Fund was noted in the Explanatory Memorandum. It will pay 100 per cent of benefits to any existing ill-health pensioners—there is probably none in the FAS yet. In the PPF, however, individuals can choose to draw that compensation before normal pension age. They must be at least 50, and payments are actuarially reduced to take account of the fact that compensation will be paid for longer. That is the case even where a person claims their pension early on ill-health grounds. Last year, a parliamentary Answer explained how this works: once the PPF has assumed responsibility for a scheme, any scheme member may take early payment of their compensation from age 50 subject to actuarial reduction. Surely the FAS is also a compensation scheme, and there must be a strong case for it operating on similar grounds. What would be the cost of treating people retiring early through ill health in exactly the same way regardless of whether they are covered by the FAS or the PPF? I am also grateful to that superb campaigner on behalf of all pensioners, Dr Ros Altman, for one or two further questions. First—the Minister touched on this—what is now the position of solvent employer schemes? In particular, how many will not qualify? Specifically, is the Desmond scheme in Northern Ireland now included? Secondly, the annuity factors used by the Financial Assistance Scheme to convert transfers out of the scheme into equivalent pensions do not appear to have reflected the pensions being given up. The Government Actuary’s Department has used factors which seem to result in the assumed scheme pension being higher than it would actually have been, therefore the FAS payments are lower. This may seem a technical point, but it could cost seriously ill people real money. Moreover, why are the Government refusing to backdate payments for those who have already been ill for many years, only making payments from 2008 or when notified, whichever is later? The FAS seems to be taking the hardest line possible against such people. These are issues of ill health, which lies at the centre of this regulation. Finally, why on earth has it taken so long to begin bringing together the administration of the Pension Protection Fund and that of the Financial Assistance Scheme? We on these Benches have been calling for that since the first Pensions Bill in 2004. We did not see the case for separate bodies then, and the dismal record of incompetence and delay by those administering the Financial Assistance Scheme since then has proved us right. These are enabling provisions. What will happen to bring the administration together, and when?