There are five stages to the FAS process
During the initial stages of Notification and Qualification the circumstances of the scheme as a whole are considered to decide whether the qualifying conditions for FAS are met. A scheme professional will usually complete this stage of the process and provide the necessary documentation. Only members of schemes that have successfully completed both of these stages can be considered for assistance.
After a scheme has successfully completed Notification and Qualification, the scheme professional will be asked to provide the information needed to assess the eligibility of individual members of the scheme.
Once the necessary member data is received, schemes enter the assessment stage. This is when the work starts to identify individual members who are eligible for FAS and calculate the levels of assistance they are due.
FAS payments usually commence to eligible members when they reach their scheme normal retirement age, which is the age stated in the scheme rules (as they applied at the date the member ceased to accrue benefits) as the date on which the member would normally retire (or age 60 where normal retirement age is below 60, or 65 where their normal retirement age is above 65). But the rules are different for survivors.
Following assessment any members who are due assistance immediately progress to the final stage of payment. Eligible members who are not at normal retirement age or a minimum age 60 will progress to payment as they become due.
Further details of what is involved at each stage are given below.
Notification
This is the first part of the application process. To complete notification the FAS must be provided with some basic information about the scheme on part A of the Notification and Qualification form FAS A1.
This information is usually provided by a trustee, manager, or professional advisor to the scheme (or, in the case of a fully wound-up scheme, a former trustee, manager or professional advisor), but can also be provided by a member of the scheme or their appointed representative, a surviving spouse or civil partner of a member of the scheme who has died.
Successful Notification does not mean that a scheme will automatically qualify for FAS, but a scheme cannot qualify unless it has first completed Notification.
All of the schemes that have provided sufficient details to notify are included on the scheme list. If you think your scheme should have applied for FAS but it does not appear on the list you should in the first instance make enquiries with the scheme trustees. If you then require further information please contact us.
Qualification
This is the second part of the application process. To progress to Qualification the scheme needs to complete part B of the Notification and Qualification form FAS A1 and return it, together with the supporting documentation needed to decide if the scheme qualifies for FAS. The period allowed for schemes to complete this part of the process, and provide the required evidence is six months from the date the information is requested by the FAS Scheme Manager.
The documents required include a copy of the scheme’s trust deed and rules together with evidence of tax approval, wind-up date, name of employer and confirmation of the employer’s insolvency event.
Applications for compromise agreement schemes must provide:
- a signed deed of compromise;
- statements of accounts showing employers' assets and liabilities; and
- documentary evidence of the full debt payable to the scheme.
For applications for schemes where the employer is still solvent but discharged the debt it was legally required to pay, or an appropriate portion of the debt, you must provide evidence that:
- there was no debt due at wind-up;
- the employer paid the debt due at wind-up; or
- there was a good reason why the debt was not paid.
Applications for schemes that have commenced wind up, where there is an active employer in place must provide:
If there was no debt due to be paid:
- the trustees’ minutes relating to this issue.
If there was debt owing to the scheme:
- the debt certificate issued by the actuary as at the date of wind-up.
If the debt certificate shows that the scheme was less than 100 per cent funded and the employer subsequently made a payment to restore funding to 100 per cent:
- the accounts showing the date and amount of the payment, or
- the trustees’ minute confirming the date and amount of the payment.
If the debt was partially met by the employer:
- the accounts showing the date and amount of the payment, or
- the trustees’ minute confirming the date and amount of the payment.
plus
- any legal advice the trustees received regarding the non-pursuance of the remainder of the debt and
- trustees’ minutes discussing the non-pursuance of the debt, and the minute confirming the decision not to pursue the remainder of the debt.
If the debt was not met by the employer:
- legal advice the trustees received regarding the non-pursuance of the debt and
- trustees’ minutes discussing the non-pursuance of the debt, and the minute confirming the decision not to pursue the debt.
This information is usually provided by a trustee, manager, or professional advisor to the scheme (or, in the case of a fully wound-up scheme, a former trustee, manager or professional advisor), but can also be proved by a member of the scheme or their appointed representative, a surviving spouse or civil partner of a member of the scheme who has died, any insurance company that is paying annuities to former members of the scheme.
Once this information is received the FAS must decide if the scheme qualifies for FAS. To meet the qualifying conditions a scheme must:
- have completed the Notification process (as described earlier);
- not be a money purchase scheme; and
- have begun the winding-up process between 1 January 1997 and 5 April 2005; or started to wind up after 5 April 2005 but is ineligible for help from the Pension Protection Fund due to the employer becoming insolvent before this date.
The FAS can make payments only to members of schemes that successfully satisfy the qualifying conditions.
Provision of Member Data
Once a scheme has successfully completed qualification, and before the assessment stage can begin, the FAS needs to be provided with information about individual members and their pensions. This information is required to be provided by the professionals who are, or who were, involved in winding-up the scheme (this may be the trustees, administrators or insurers). A period of three months is allowed for the provision of this data.
Information in respect of survivors should be provided within one month of the date of the notification of death.
In cases of ill health, severe ill health or terminal illness, the information must be provided within 14 days of the request for information. The process at this stage is determined by whether the scheme is still winding-up, or if it has completely wound-up.
In more general terms, where it is not possible for the provision of information within the timescales set out in regulations, the FAS scheme manager may extend the timescales, where appropriate.
If the scheme is currently winding-up – The final amount of FAS due to eligible members can only be calculated once the winding-up process has been completed. For some schemes this may take a number of years. To allow members who reach scheme normal retirement age during the winding-up period to receive assistance, the Scheme Manager has the discretion to award initial payments.
If the Scheme Manager agrees to make initial payments the trustees are asked to supply data on those members who are, or who will shortly reach scheme normal retirement age.
If the scheme has fully wound-up – As the winding up process has concluded the final level of benefits secured for members by the scheme will be known. At this stage the trustees or administrators are asked to provide the Scheme Manager with information on all members of the scheme in order for us to assess the scheme for final payments.
Assessment
This stage of the process begins once the necessary member data is received. Eligible members are identified and the levels of assistance payable are calculated.
FAS annual payments will top up the pension paid by the scheme to a level broadly equivalent to 90 per cent of the eligible members accrued pension rights, subject to a cap of £30,297 for anyone whose entitlement begins between 1 April 2011 and 31 March 2012.
The calculation of initial payments follows a similar formula to the calculation of annual payments. If initial payments are awarded, these continue until the winding-up is completed and final levels of assistance can be determined. At this stage it may be necessary to adjust levels of assistance to take account of the actual amount of benefits secured from the scheme.
Payment
FAS payments to eligible scheme members can usually commence at their scheme normal retirement age. Surviving spouses, civil partners and surviving partners of qualifying members can be paid at any age. Payments can be made to members who are not yet at normal retirement age if they are suffering ill health, severe ill health or terminal illness. See Early access to FAS payments.
After the scheme has been assessed, eligible beneficiaries are notified and sent the Personal Details form FAS A2 to complete in order to confirm their personal details. Payments cannot begin until this form has been completed and returned to the FAS.
The amount of any FAS award is taken into account when considering entitlement to many social security benefits, such as Pension Credit, Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Housing Benefit and Council Tax Benefit. Members who are in receipt of such benefits should inform their benefit paying office that they have been awarded FAS, and discuss how it will affect the amount of benefits payable to them. Because their income will be affected, members are encouraged to discuss the position with their benefit paying office before completing and returning the Personal Details form FAS A2.