9 June 2010
CALCULATING 90% OF FAS EXPECTED PENSION
The Financial Assistance Scheme (FAS) will top up eligible members’ pension benefits up to a total of 90% of their accrued pension as at the start of wind-up, revalued to their eligibility date (subject to a cap). This revalued pension amount is known as the member’s ‘expected pension’.
In some circumstances, trustees may need to calculate what 90% of expected pension is to inform their decisions. This guide is to help you, as a trustee, understand how to calculate 90% of expected pension.
Guidance - Calculating 90% of FAS Expected Pension
25 November 2009
FINANCIAL ASSISTANCE SCHEME: TRANCHED BENEFITS
The Financial Assistance Scheme is committed to paying all members currently receiving Assistance and those who are now reaching their normal retirement age based on the December 2007 announcement and subsequent legislation. Therefore we requested that all data is provided on the enhanced S1 which includes a breakdown of the accrued benefit elements into relevant tranches.
SCHEMES IN WIND-UP
We are grateful for the S1 data received to date. However, further analysis has identified problematic trends within the information returned. In particular, we have noted that tranches of pension with different dates of entitlement are not always being provided to correctly reflect equalisation. It is essential that the data is presented in this format to ensure that the right amount of Assistance can be paid. If the information is not automatically available you will need to calculate the tranches and complete the S1 appropriately. We will also review all data previously provided and you may be required to revisit those data sets which need tranching.
We have produced desk aids (see below) that give a further explanation of the way in which we expect data to be provided. This also includes a number of examples that clarify our requirements. We should add that for pensioners at the start of wind-up with all tranches in payment, there is not an issue.
Additionally, the NPA for GMP tranches should always be the member’s state pension age (ie 65 for men, 60 for women). Also, you must ensure that non-GMP tranches which exist solely within the Barber Window (for example, benefit type 9 on the S1) reflect the NPA that is relevant for Barber Window service.
We are sometimes informed that equalisation does not apply to a scheme. In these circumstances we require an explanation as to the reason why.
SCHEMES THAT HAVE WOUND UP
We would expect the necessary calculations to have been completed before conclusion of wind-up and for the appropriate tranches of pension elements to be represented on the S1.
NRA and Benefit Type Examples
How to show equalised elements in the S1 Benefit Details worksheet
Archived bulletins are available from the DWP site.