The Pensions Action Group (PAG) has expressed its disappointment after the government opposed amendments to the Pensions Schemes Bill, which were intended to address the lack of any pre-April 1997 indexation relating to the Financial Assistance Scheme (FAS) and Pension Protection Fund (PPF).

Speaking during the committee stage of the Pensions Schemes Bill, Pensions Minister, Torsten Bell, said that the new clauses 18 and 19 "would not work" as they would apply to subsets of the PPF population.

"Some pensioners would receive indexation, and some would not," he explained. "The same flaws in the new clauses apply to FAS. We will definitely be opposing the new clauses."

The PAG has since written to the Minister to ask for further clarification on this, emphasising that "while you and/or the current government may have minor misgivings about the proposed new clauses, you have not proposed any alternative, or suggestions of any other way of resolving the long-running issue".

"When we met you on 12 February this year you stated that you clearly understood the financial hardship and stress caused by the zero indexation applied to FAS relating to a member’s pensionable service before April 1997, and that you would ask for further information from your department so that you could respond fully to the needs of FAS recipients who are facing poverty in their final years, despite them all following government advice and saving for their retirements," the group wrote.

The latest costings from the PPF on this showed that potential solutions are available, ranging from a total of £103m for the next 10 years to between £300m and £600m over the whole remaining life of FAS, or more if considering any arrears.

"As the new Pensions Bill is still passing through parliament, we implore you to take this opportunity to introduce suitable clauses to provide the full indexation, both pre-1997 and post-1997, that the 90,000 retired workers now receiving FAS had paid for," the group stated.

"We understand that due to the need of Primary Legislation, if you do not take this opportunity, then you will be effectively informing us that nothing will be done by you or your government to support these FAS recipients and their families."

The group also confirmed that it had been informed that the last Pensions Minister from the previous government had reached a notional agreement with the then Secretary of State and the Treasury to rectify this injustice, and to provide the pre-1997 indexation.

Given this, it said it "simply [does] not understand why you and your department do not have all the necessary information to make your decision and to respond more positively to the recommendation made by the WPSC in their report on defined benefit (DB) schemes".

The group also stressed the need for a solution to be implemented sooner rather than later, given the fact that there are now fewer than 90,000 FAS recipients left alive, from the initial 140,000 originally affected.

"These people are sadly dying on a daily basis knowing that they are leaving their spouses with inadequate financial incomes," the group stated. "The FAS recipients have not got the time left for you or your department to delay any longer; they desperately need the pension that they paid for."

Whilst the ultimate decision on the issue lies with the government, this is an issue the PPF has been engaged with, as a PPF spokesperson said: “Through our own regular engagement with our members, we are acutely aware of the impact and strength of feeling on this issue.

"We continue to prioritise supporting colleagues in government to progress their ongoing consideration of our compensation framework, including the levels of indexation we pay our members, work unaffected by our recent decision on levy.”

A DWP spokesperson said: “We recognise the importance of pre-97 indexation to affected members of these compensation schemes, which is why we are continuing to give this matter active consideration.

”Any changes in this area would have significant implications on public finances, which is why we need to consider it thoroughly.”

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