Financial Assistance Scheme

The Financial Assistance Scheme was set up to help people who had invested in a pension savings scheme which their employer was offering, but lost their money when their employer went bankrupt or the pension scheme was under-funded. The Financial Assistance Scheme cannot guarantee that you will be eligible for assistance, nor can it offer you the individual benefits that your scheme had promised. However, the Scheme will try to help those who are in need and have been left in a difficult financial situation as a result of the loss of their pension.

In order to qualify for help from the Financial Assistance Scheme your employer’s pension scheme must have been affected by a financial crisis which put your pension in danger and resulted in you losing your money. This financial crisis must have occurred by the 28th February 2007, and you must have been within fifteen years of retirement age on the 14th May 2004 for the Financial Assistance Scheme to consider your claim. Since April 2005, if you have had difficulties with or lost money through your employer’s pension savings scheme, you may be entitled for help from the Pension Protection Fund. For more information on this topic see Pension Protection Fund.

Depending on when you will reach retirement age, the Financial Assistance Scheme will pay you a percentage of the pension you were expecting to receive. If you reach retirement age:

• On or before 14th May 2011 - entitled to 80%
• Between 15th May 2011 and 14th May 2015 - entitled to 65%
• Between 15th May 2015 and 14th May 2019 - entitled to 50%

The Financial Assistance Scheme will pay you the relevant percentage of your expected pension as long as it is more than the minimum pay out of £520 a year, and less than or equal to the maximum pay out of £12,000 a year. It is anticipated that people with pensions which fall below the minimum limit will be able to manage without their expected pension, whilst people with expected pensions worth more than £12,000 a year will have other savings to help them manage their expenses and will not need their full expected pension to survive. If the percentage of your expected pension would be more than the £12,000 limit, but you qualify for help from the Financial Assistance Scheme, you will be entitled to £12,000 but no more.

If the pension holder has died and you are the pension holder’s surviving spouse or civil partner, you might be entitled to help from the Financial Assistance Scheme. Your late partner must have met the qualifying conditions of the Scheme, but payments can be made to you regardless of your age. Generally you will be entitled to fifty percent of the amount your late partner would have received. Exact calculations will depend on your individual circumstances, such as exactly when your late partner died and the nature of their pension scheme.

If you believe you are entitled to help from the Financial Assistance Scheme, you can contact the Benefit Enquiry Line on 0800 88 22 00 or ask for information at your local Jobcentre Plus or Citizens Advice Bureau. If you are successful, your money will be paid monthly into an account you nominate, via direct debit.