AS PPF STARTS PAYING ROVER PENSIONERS, EFFICIENCY OF PPF SHOWS UP CUMBERSOME BUREAUCRACY OF FAS. PPF SHOULD TAKE OVER FAS.
A PPF SOLUTION IS NOT ‘UNAFFORDABLE’ AT ALL. CUTTING OFFICIAL BENEFIT OVERPAYMENTS BY HALF WOULD COVER EXTRA COSTS IN UNDER TWO YEARS.
Press Release by Dr Ros Altmann
27th March 2007
The Pension Protection Fund (PPF) has just started paying MG Rover pensioners, bringing the total number of pensioners being paid by the PPF to 1393. The efficiency of the PPF operation contrasts sharply with the Financial Assistance Scheme (FAS), which is still only managing to pay 1013 people, even though about ten thousand should already be receiving their pensions and their schemes failed many years before Rover collapsed.
Even more importantly, Rover pensioners have been paid by the scheme trustees anyway, while waiting to be taken over by the PPF. By contrast, members past pension age in FAS schemes have been struggling without any pension at all, and even without some of their state pension, for years. They are not paid their full FAS benefit until their scheme has finished winding up. The Government’s fine words about billions of pounds being put into the FAS do not fit with reality. MPs and the public need to understand just how shamefully members of schemes outside the PPF are being treated.
Their trustees are not allowed to pay out even the FAS level of benefits from scheme assets. The cumbersome bureaucracy of the FAS is leaving these pensioners without anything. The suffering continues unabated, while all those in the PPF have at least had the PPF benefit all the way through. They have also had the certainty of knowing what they can expect in future, rather than the dreadful uncertainty of the FAS.
Why are FAS scheme members being treated so cruelly? As well as the 10,000 people who should be receiving FAS payments and are not, there are also others who need their pensions and have been excluded from FAS. Those who should have retired before age 65 are getting nothing and solvent employer scheme members are still left out totally.
Surely, it is time for a fair and proper resolution of this scandal. Why should people whose schemes failed before PPF – who had no warning that their pensions were other than completely safe – be treated so much worse than those who qualify for PPF?
No more annuities should be purchased, scheme assets that are available should be transferred to the PPF, to be run as a separate division by the efficient administration that has already been established there, rather than waiting for annuitisation and for the FAS bureaucracy to kick in.
Thousands of people who did nothing wrong, and prudently saved as Government advised, are left destitute while politicians try to defend the indefensible. The DWP has refused to accept the Parliamentary Ombudsman and PASC’s verdicts, even though the High Court said that ‘no reasonable Secretary of State could rationally disagree’ that there was maladministration.
John Hutton’s figures show that the cost of increasing FAS payouts to PPF levels is just £600million in net present value terms and some of the money will be recouped in tax payments and benefit savings. This is far less than the £725m cost to taxpayers of official mistakes made in one year by overpaying benefits to people who were not entitled to them. (Customer errors and fraud cost a further £1.5bn) If officials could cut their own mistakes by half, then the extra cost of providing a PPF solution to this problem would be recouped in under two years!
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