Financial Assistance Scheme · CAS-43876-Y6T8

CAS-43876-Y6T8

Ombudsman’s Determination Applicant: Mr R

Scheme: Financial Assistance Scheme (FAS)

Respondent: The Board of the Pension Protection Fund (the Board)

Outcome

Appeal summary

Background information, including submissions from the parties Background

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Expected pension in 2019 x 90% £8,845.90

Annuity at date of leaving £4,592.48

Annuity in 2012 £7,772.15

Annuity in 2019 £6,061.12

1 The notional annuity related to an overpayment which is being recovered. 2 Received on 30 December 2019.

3 CAS-43876-Y6T8 Mr R’s grounds for appeal

3 Taken from the ASW Fund member leaflet.

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Written representation by the Board

Adjudicator’s Opinion

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4 Regulation 23, The Financial Assistance Scheme (Appeals) Regulations 2005 (SI2005/3273) (as amended) 5 Paragraph 2A(3)

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Mr R did not accept the Adjudicator’s Opinion and the appeal was passed to me to consider. Mr R provided further comments which are summarised below. I have considered Mr R’s comments but I find that they do not change the outcome, I agree with the Adjudicator’s Opinion.

Mr R’s further comments

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Ombudsman’s decision

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I find that the Board has calculated Mr R’s FAS payments in accordance with the FAS Regulations. I do not uphold Mr R’s appeal.

Anthony Arter Pension Protection Fund Ombudsman

11 April 2022

9 CAS-43876-Y6T8 Appendix The Financial Assistance Scheme Regulations 2005 (SI2005/1986) (as amended)

“(expected pension x 0.9) – actual pension”

“(1) In this Schedule, “actual pension” means … the annual rate of annuity which has been, can be or could have been, paid to the beneficiary as at the later of -

(a) the day from which the beneficiary is entitled to an annual payment; or

(b) the day on which the qualifying pension scheme began to be wound up,

as a result of the purchase of an annuity with the assets available to discharge the liability of the scheme to, or in respect of, the qualifying member after that liability has, or had, been determined.

…

(3) The annual rate of annuity which has been, can be or could have been purchased for the beneficiary for the purposes of sub-paragraph (1) … as a result of the purchase of an annuity with the assets referred to in that sub-paragraph, shall be determined (or, as the case may be, redetermined) -

(a) where the beneficiary was an active or a deferred member of the qualifying pension scheme on the day before the day on which the qualifying pension scheme began to be wound up, on the basis that the sum which will be, or has been, used to discharge the liability of the scheme to him will only be, or has only been, used to purchase an annuity when the qualifying member attains, or attained, his normal retirement age;

(b) …

10 CAS-43876-Y6T8 (d) on the basis that there has been no commutation of benefits deriving from the scheme after the day on which the scheme began to be wound up ...”

“(1) This paragraph applies where -

(a) on the first indexation date 6 following the date on which the beneficiary first became entitled to an annual payment; and

(b) on any indexation date following that first indexation date;

the annual rate of annuity which has been or could have been paid to the beneficiary as at that indexation date as a result of the purchase of an annuity with the assets available to discharge the liability of the scheme to, or in respect of, the qualifying member after that liability has or had been determined, is higher as a result of indexation or revaluation than the annual rate determined in accordance with paragraph 2.

(2) Where this paragraph applies, the scheme manager shall redetermine the annual payment payable to that beneficiary with effect from the indexation date.

(3) When redetermining an annual payment under sub-paragraph (2), the actual pension for the purposes of paragraph 3(2) or 4(2) shall be the annual rate of annuity which has been or could have been paid to the beneficiary as at the indexation date as a result of the purchase of an annuity with the assets available to discharge the liability of the scheme to, or in respect of, the qualifying member after that liability has or had been determined, on the basis of, and having regard to, the matters referred to in paragraph 2(3) …”

“(1) Except where there is no percentage increase in the general level of prices for the period of 12 months ending with 31st May last falling before the indexation date, a beneficiary entitled to an annual amount determined in accordance with paragraphs 2A to 5B shall be entitled, on the indexation date, to an increase of -

(a) the appropriate percentage of the amount of the underlying rate immediately before that date, …

(2) In this paragraph -

6 1 January

11 CAS-43876-Y6T8 “appropriate percentage” means the lesser of -

(a) the percentage increase in the general level of prices for the period of 12 months ending with the 31st May last falling before the indexation date; and

(b) 2.5%;

“underlying rate” means -

(a) the aggregate of -

(i) the product of X multiplied by so much of the expected pension as is attributable to post-1997 service; …

(iii) any annual increases to which the beneficiary is entitled in accordance with sub-paragraph (1) immediately before the indexation date; …

“post-1997 service” means -

(a) pensionable service (whether actual or notional) which occurs on or after 6th April 1997; or

(b) where the annual payment is payable to, or in respect of, a qualifying member who is, or was, a pension credit member of the scheme, pension credit rights deriving from rights attributable to service (whether actual or notional) which occurred on or after 6th April 1997;

…

“X” means -

(a) 0.9, where the beneficiary is the qualifying member;

…”

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