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(This note is not part of the Regulations)
The Financial Assistance Scheme Regulations 2005 (S.I. 2005/1986) (“the FAS Regulations”) establish a financial assistance scheme (“the Scheme”), allowing for payments to be made to or in respect of certain members or former members of certain occupational pension schemes where the liabilities of the scheme to those members are unlikely to be satisfied in full.
Schedule 2 (determination of annual and initial payments) to the FAS Regulations prescribes the method for calculating the amount of an annual payment for each category of qualifying member or their survivor. It also provides for a cap (“the FAS cap”) to be imposed on the amount of expected or actual pension (paragraph 7). Schedule 2A (determination of ill health and interim ill health payments) makes similar provision in the case of ill health payments.
Regulation 2 of these Regulations inserts a new provision, regulation 17AA (meaning of “the FAS Cap”) into the FAS Regulations. It provides for a revised FAS cap dependent on a person’s length of pensionable service when the person first becomes entitled to an annual payment or an ill health payment under the Scheme.
The standard amount, calculated in the same way as the current cap, will apply to anyone with pensionable service of less than 21 years. For anyone with 21 years or more pensionable service, the FAS cap will be increased by 3 per cent of the standard amount for each full year over 20 years, to a maximum of double the standard amount. The standard amount will, however, continue to apply in the case of initial and interim ill health payments under the Scheme.
Regulations 3 and 4 of these Regulations make amendments to the FAS Regulations consequential on the introduction of the new FAS cap.
Regulation 5 of these Regulations is a transitional provision which provides for how the FAS cap is to be re-calculated where the person is already receiving an annual payment or an ill health payment before these Regulations come into force or the person had been receiving initial payments or interim ill health payments (irrespective of when those payments start) before being paid an annual or ill health payment. In particular, it provides that the new FAS cap for long service is to be calculated using the cap amount that applied when the person first became entitled to an annual payment or an initial payment under the Scheme (regulation 5(3)). The increased amount takes effect from the date the Regulations come into force or the person first became entitled to an annual payment or an ill health payment, whichever is later (regulation 5(4)).
An impact assessment has not been produced for these Regulations as they have no impact on business or civil society organisations.
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