ONLY a few people have so far been compensated by the Government’s £400 million scheme for workers who have been denied their pensions, nearly two years after the project was announced.
At least 15,000 of the estimated 85,000 workers who saw their retirement savings disappear when their companies went bust are eligible for immediate compensation from the Financial Assistance Scheme (FAS).
But only 13 former workers — all of them from Allied Steel & Wire, the Cardiff steel company that went into receivership in July 2002 — have received funds from the scheme since it opened last September.
This is despite an admission in June 2004 by Andrew Smith, the Work and Pensions Secretary at the time, that the 85,000 workers were suffering “terrible anxiety” because of their losses.
In a speech at the Labour Party conference last September the Chancellor lauded the FAS, which was announced in May 2004 to compensate workers whose companies collapsed too early to be eligible for the Pension Protection Fund, the Government’s safety net.
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“It was a scandal that men and women who lost their jobs when firms went under lost their pensions too,” Gordon Brown told the conference. “We should be proud that in the last year it is Labour that has created the first-ever Pension Protection Fund, Labour that has provided £400 million more for those who lost out in past years.”
But the Department for Work and Pensions admitted yesterday that there remained a “considerable amount to be done to ensure that all those eligible for help start getting it”.
A DWP spokeswoman said: “The FAS began making payments in December 2005 and we have been able to provide invaluable help to the first of those eligible for assistance. However, this is just the start.”
Ros Altmann, the pensions adviser to No 10, said that only people with terminal illnesses or those well over the age of 65 had so far received payment from the FAS. Even these people have had their payments capped at 60 per cent of what they had been promised, up to a limit of £12,000 a year, which was then taxed, she said.
Dr Altmann said: “This is total injustice but we have Gordon Brown and (the Pensions Minister) Stephen Timms standing up and saying how wonderful the scheme is.”
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The Parliamentary Ombudsman, the government watchdog, is expected to report within the next few weeks on whether the Government was at fault for encouraging workers to save into what were throught to be safe final-salary pension schemes.