Re Budget? Core Pension? Whats That?

murphydavid

Government release (I think) reference the budget. quote

"5.65 The Financial Assistance Scheme was established in 2004 to assist those who lost
Significant amounts when their pension schemes started winding up between 1 January 1997
and 5 April 2005 as a result of the sponsoring employer becoming insolvent. Budget 2007
announces that the Government will now extend the Financial Assistance Scheme further so
that all members of affected pension schemes receive assistance of 80 per cent of the core
pension rights accrued in their scheme. The cap on maximum assistance will be increased to
£26,000 and the de minimis rule that excludes those whose FAS payment would be £10 or
less a week will be removed. This includes an additional 85,000, ensuring all 125,000 who lost
their pensions will benefit, bringing total long-term expenditure to £8 billion. The Secretary
of State for Work and Pensions will set up a review to look at making best use of assets within
these schemes, which will report later this year."

Anybody know what the Chancellor means by "80 per cent of the core pension rights"
Roughly. My last pension statement said "the pension is fully funded and on retirement I am entitled to x percent of my final salary incremented by 3% per annum from now till retirement date" Followed almost immediately by "on demise of your company your pension fund has been handed to an independent company who will wind it up" Followed by the independent company saying "there is definitely not enough money in the fund to pay your pension don't ring us we will ring you the wind up is being delayed by the government department not having time to process certain documents" That was over 3 years ago and I have been stone walled ever since.
By the way being 61 I have another 4 years then it becomes serious.
I would really like to know how much I will get.
It was bad enough loosing my job. but - no income. no pension. no information. no plans. no future (And from the P.M. Quote "Company Pension.. no worries") but then my taxes pay his.

exil

Please accept my sympathy not that it will be much practical help to you!

I'm not an expert in this area but a common sense interpretation would be, in a final salary scheme, 80% of what you would have expected to get. Your case looks like one where the scheme would be invoked.

Here's the link to the Pensions dept information (which doesn't include the budget changes)

http://www.dwp.gov.uk/lifeevent/penret/penreform/fas/

I understand that as with other parts of the government the FAS's wheels grind slow. There is provision for interim payments once you reach 65 and no final settlement has been reached.

The change in the budget is that the 80% rule applies to everyone, before it was tapered according to how close to retirement you were, if you were a long way from retirement you only got 50%.

murphydavid

Thanks I hope you are right but I don't trust common sense any more. The man who said this also said something like. have no worries if you are in a company pension I will enforce your company to keep it fully funded so no matter what. After Maxwell I can now say that will never happen again you will be O.K. and I thought common sense tells me that fully funded means there would be enough money to pay my pension but it actually means "I give a fund manager you don't know free licence to gamble (sorry invest) with your money. If he wins the company can have the winnings but if he losses then so do you".

cheerfulcat

murphydavid wrote: »

Anybody know what the Chancellor means by "80 per cent of the core pension rights"
Roughly. My last pension statement said "the pension is fully funded and on retirement I am entitled to x percent of my final salary incremented by 3% per annum from now till retirement date"

I'm very sorry to read of your predicament. I hope that you will get some help from this scheme but it looks as though it might take rather a long time, doesn't it?

If you look at this extract from Hansard, ( LINK ) " core pension " seems to mean just the basic pension, without indexation and other " benefits ".

EdInvestor

Hello David

When did this happen to your pension?If it's more recent it should be covered by the Pension Protection Fund.

murphydavid

Over 3 years ago (seems like forever) and sadly I'm not covered by the Pension Protection Fund.

Debt_Free_Chick

murphydavid wrote: »

Anybody know what the Chancellor means by "80 per cent of the core pension rights"

It's annoying when politicians or anyone else introduces new jargon, when there's already existing jargon to describe the same thing! :mad:

Core pension rights seems to be a term that is used whenever anyone talks about the FAS. However, it just means your deferred pension as at the date the scheme ended. Deferred pension is the term that has historically been used to describe the pension you are entitled to at any given date. It's not a forecast of what you might get in the future, but the pension as at "today's" (or any other) date, that you will receive when you retire. In a final salary scheme, it would be based on pensionable service calculated to and final pensionable salary calculated as at any given date - in your case, at the date the scheme began to wind up (or the date the scheme was first closed).

You should have had a statement or letter to confirm the pension you had built up, up to the day the scheme began to wind up. That pension would normally be inflation-proofed (to some extent, though probably not fully inflation-proofed) up to your normal retirement age and paid to you at that time.

That was over 3 years ago and I have been stone walled ever since.

Most pension schemes take forever to wind up. The investment of assets of the scheme may have to be rearranged; members need to be traced (many don't bother to inform the scheme of any change of address) and benefits still need to be paid for those who have died or reached retirement age since the winding up began.

Complex actuarial calculations are also needed and, sadly, the pensions industry does not treat winding up as a priority - when there's work to be done for other ongoing clients. In addition, there are additional hurdles to be negotiated if the FAS is involved - the FAS has been notoriously slow to process payments to qualifying schemes. :mad:

The independent trustee ought to issue a communication annually to reassure you that progress is being made. Many don't, however, as the cost of such communications is met from the assets of the scheme, which are already insufficient. So the cost of communication could have the result of reducing your pension entitlement even further!

murphydavid

Thanks for that.
From what you say I can now work out what 80% of my defered pension is.
As the Chancelor seems to have garaunteed this sum, when I reach 65 (if its not wound up by then) will it be my right to get at least that sum from the company holding my pension fund (after all they can't loose as the treasury will be paying) and will they actually pay me that money or will they be able to say that because it is not wound up they can't tell what I am entitled too and hold back?
I wonder because that is the sort of attitude they seem to have at the moment or maybe thats what the law says they have to do.
One of my colleages has reached 65 and I don't think he is getting anything and last time I wrote to them and asked if they could tell me the absolute minimum I might expect to get they sent me a letter saying how much their Director was being paid per hour (£250.00 lucky him) and that the remaining pension funds were being depleted by that amount as he would be paying for his time by taking money from the pension fund. In the end the expensive answer to my simple question was don't know nothing is certain.
The Government has selected this company to hold my funds and there is nothing I or my M.P. can do about it. Their letter heading says "the balanced view" what a joke.
What really bothers me is the way everything revolves arround "Its not wound up yet so we can keep your money" and then it seems it will never ever be wound up. I don't think anyone is actually doing anything so how can it get wound up?

EdInvestor

Is the scheme covered by the FAS ( see link above in exil's post )?

That's the body via which you would get any money from the Government.

exil

I think that's what the OP is referring to - basically the FAS is dealing with the case, but exceedingly slowly.