PAG urges MPs to back bill amendment to index pre-97 FAS pension rights

Next week, the House of Commons Public Bill Committee will begin its scrutiny of the Pension Schemes Bill.

While the bill currently includes a number of provisions relating to the Pension Protection Fund (PPF) and FAS, PAG says it fails to introduce indexation for FAS members' pre-1997 pensionable service – a move that was recommended, where original schemes had provided for this, in the Work and Pensions Committee's third report on defined benefit (DB) pension schemes last March, potentially using some of the multi-billion pound PPF reserves to do this.

PAG said it understands various MPs and members of the Lords will introduce an amendment to the Pension Schemes Bill to remedy this situation – saying it now needed "every MP to support the amendment".

FAS provides compensation to members of DB schemes who lost all or part of their pension if their scheme came to an end between 1 January 1997 and 5 April 2005. PAG says the lack of pre-1997 indexation meant, however, that many FAS members in their 70's and 80's were now receiving 50% or less than they had expected.

PAG said the cost of paying pre-1997 indexation at 2.5% per annum would cost £13m per year on an ongoing basis for the next ten years – adding that, as the average age of FAS recipients is now 73, it expected there would be a considerable decline in costs during and after that period.

In a statement, PAG said: "In the last few months, we have lost so many FAS members and to delay and continually ignore this major social injustice remains both financially and morally wrong, and devastating to the individuals affected, and their spouses.

"We implore the minister to act immediately to correct this major injustice. Confidence in pensions savings is at an all-time low, and the country needs some reassurance that when workers save for their retirement their savings will be safe and secure!"