Press release

Saga welcomes DWP consultation addressing loopholes in UK Pension Protection regime

Friday 10 June 2011

G&H Scheme to be included in FAS after pressure from Saga

The Government has today announced a new Consultation that will prevent a major pension scandal that could have seen thousands of UK pension scheme members once again stripped of their pensions.

A few months ago, it emerged that the Government's system of pension protection had failed and members of the George & Harding pension scheme were at risk of losing their pensions. This small scheme was the first, but experts warned that many others could be similarly at risk. Saga's Director-General, Dr. Ros Altmann, has been lobbying Ministers on behalf of scheme members to highlight their plight and demand that this situation be remedied before more members suffer the same fate.

Welcoming the DWP Consultation, Ros Altmann, who has previously campaigned for many years to persuade the Government to ensure that all pension scheme members must be properly protected, said:

"I am so pleased that the Government has listened to the pleas on behalf of scheme members who were assured their pensions had been protected by UK law and suddenly discovered that protection was not there. It has been dreadful for them and the trustees as they faced the prospect of losing much of their pensions even though they were already retired. I have seen the devastating effect that losing a pension can have on people's lives and thought we had put those days behind us. I hope these new measures will restore the much-needed protection to UK pension schemes in future."

Despite paying Pension Protection Fund (PPF) levies for years and supporting the scheme, the trustees found that, when the sponsoring employer failed, flawed legislation excluded the G&H fund from the PPF cover that was supposed to apply to all UK schemes after 2005. As the original statutory employer left the scheme in 2002, members did not qualify for the alternative protection of the Financial Assistance Scheme (FAS) either.

Last year, Ros Altmann called on Ministers to remedy the legal flaws as soon as possible. It seems that this is now going to be done.

"It is reassuring to see that the Government has listened to the representations made on behalf of these members and I hope that they will be able to relax a bit more now about their futures." said Dr. Altmann.

She added: "If the new proposals are passed, G&H members will have their pensions protected by the Financial Assistance Scheme (FAS), which tops pensions up to around Pension Protection Fund (PPF) levels for members of underfunded schemes whose employers failed before the PPF started."



1. This is Release from Saga December 2010

2. Background information about the George and Harding situation can be found in my article from Financial Adviser published earlier this year Adviser

3. Before the PPF was established, between 1997 and 2004, 140,000 UK final salary scheme members faced the loss of much or all of their pensions, when their employer schemes failed. Despite being assured that they were protected by funding laws and regulatory requirements, many people - some very close to retirement - found that their life savings had been taken away from them and they faced the loss of their company pension - and some of their state pension as well.

4. In order to prevent such problems in future, the previous Government established the Pension Protection Fund (PPF) to provide an industry insurance arrangement (funded by all UK defined benefit pension schemes) that would replace around 80% of members' benefits (up to a cap of around £28,000 a year pension) and all scheme members were told that they could no longer lose all their pension. However, the PPF did not cover the members of schemes which had failed before it started!

5. This major pension scandal dragged on for years and, along the way, many victims had to demonstrate against the Government, begging for the injustice to be remedied. Some died without ever getting their pensions. After many years, the Government finally capitulated and agreed to extend the Financial Assistance Scheme. It would pay out benefits up to PPF levels.

6. The consultation will run until 1 September and can be found at: It will ensure that scheme members which 'lost' their statutory employer before June 2010 will be covered by the FAS even if they do not qualify for the PPF.

7. The consultation also deals with other technical details of the FAS, including ill health payments and rationalising the piecemeal legislation.