UK - Pensions experts have dismissed chancellor Gordon Brown's decision to top up the Financial Assistance Scheme (FAS) to £8m in yesterdays budget as an admission of failure.
Announcing the UK budget for 2007/2008 yesterday, Brown said the amount of funding behind the FAS would increase from £2bn to £8bn. However, industry experts have viewed this as an admission of how poorly run the FAS actually was.
BDO Stoy Hayward investment management director David Philips said: “This is to some extent a confession of the government’s failures, and perhaps an attempt for the chancellor to curry favour before becoming leader.”
Independent pensions adviser Dr Ros Altman and Alexander Forbes financial services development manager Jarrod Parker said that it was time the government dealt with the pensioners that had lost their pensions instead of just talking about it.
Parker added: "A headline grabbing announcement is great for political capital - but some pensioners from bust schemes have been waiting ten years for financial assistance which has not been forthcoming.
"The government needs to pull its finger out and pay pensioners proper compensation before it is too late. The real question now is how quickly the money can get into the system. As ever, the devil is always in the detail."
Altman said that extending the FAS would not be the answer. Up to now it has paid out £3m, and there are 10,000 people without their pensions and more coming up to retirement each week.
Lane Clark & Peacock partner David Everett is also concerned about the cost of the FAS. He said: "We have yet to find out how a scheme that has run up large administrative costs and has been so disappointing in its ability to actually make payments will be able to cope with a quadrupling in its size.
"If an earmarked section of the PPF is to be used, defined benefit scheme sponsors will want cast-iron assurances that there can be no leakage."
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