Early access to FAS payments for members in poor health

Transcription

1 Financia Assistance Scheme Eary access to FAS payments for members in poor heath Pension Protection Fund Protecting Peope s Futures The Financia Assistance Scheme is administered by the Pension Protection Fund

2 Important information about this booket This booket is for guidance ony, it is necessariy simpified and not a definitive statement of aw or entitement. Information in this document is based on current understanding of the egisation in force at the time of writing. Assistance wi aways have to be cacuated in accordance with egisation which wi, therefore, override in the case of any confict. We recommend that you get independent financia advice before making financia decisions based on this booket

3 Contents What is the Financia Assistance Scheme? 4 MAIN POINTS 5 Who can receive payments from the FAS because of poor heath? 5 MAIN POINTS ON ILL-HEALTH PAYMENTS 6 More eigibiity rues for i-heath payments 6 How do you work out how much I wi be paid? 6 When wi I start being entited to i-heath payments? 8 Can I take tax free cash? 8 Important things to be aware of 9 MAIN POINTS ON SEVERE ILL-HEALTH PAYMENTS 11 More eigibiity rues for severe i-heath payments 12 How do you work out how much I wi be paid? 10 When wi I start being entited to severe i-heath payments? 11 Can I take tax free cash? 11 SUMMARY OF THE MAIN CONDITIONS FOR BOTH KINDS OF PAYMENT 13 HOW TO APPLY FOR PAYMENTS FOR ILL-HEALTH OR SEVERE ILL-HEALTH 14 Asking for a form 14 Giving us evidence 14 Other peope contacting us on your behaf 16 After we receive your form and evidence 16 FREQUENTLY ASKED QUESTIONS 17 Protecting Peope s Futures 3

4 What is the Financia Assistance Scheme? The Financia Assistance Scheme (FAS) offers hep to some peope who have ost out on their pension because: their scheme wound-up (cosed down) and did not have enough money to pay members benefits in fu, and the empoyer cannot pay the shortfa because it: is insovent (unabe to pay its debts), or no onger exists, or no onger has to meet its commitment to pay its debt to the pension scheme in certain circumstances. This booket tes you how eigibe members of quaifying schemes can appy to receive their FAS payments before their norma retirement age because they are in poor heath. We expain: the two types of payments avaiabe from the FAS because of poor heath who may be eigibe for payments because of poor heath how to appy, and how we work out how much you wi be paid. Pease read the whoe booket and keep it for reference. This booket is a guide to the assistance provided by the FAS for those in poor heath. It is not intended to cover a circumstances and is not a fu statement of the aw. More genera information about the FAS can be found in the booket, What the Financia Assistance Scheme means to you. You can get more information from the FAS section of the Pension Protection Fund website at 4 Protecting Peope s Futures

5 MAIN POINTS Who can receive payments from the FAS because of poor heath? There are two kinds of FAS payment reated to poor heath. These are: i-heath payments, and severe i-heath payments. There are different rues for each kind. To receive either payment you must be: an eigibe member of a quaifying 1 pension scheme, and unabe to work due to i-heath, and ikey to be unabe to work unti your norma retirement age because of your i-heath. Pease note: if you think you have a termina iness, you may be abe to receive payments from any age without reduction. If you fee this may appy to you, pease contact the FAS using the detais at the back of this booket. We wi ask for evidence to support your appication for either kind of payment. 1. You can read more about which schemes quaify and which members are eigibe in the booket, What the Financia Assistance Scheme means to you, or on the FAS section of the Pension Protection Fund website at Protecting Peope s Futures 5

6 MAIN POINTS ON ILL-HEALTH PAYMENTS More eigibiity rues for i-heath payments These rues appy in addition to those in Main points Who can receive payments from the FAS because of poor heath? on page 3. For i-heath payments you wi need to show that you have been advised, by your GP or another medica professiona, not to work because of i-heath. You aso need to be within five years of your norma retirement age. The FAS takes your norma retirement age to be the age at which you woud usuay draw benefits from your scheme, as stated in the scheme rues in force when you ceased to accrue benefits, or: 60, if your scheme rues say you woud usuay retire before age 60, or 65, if your scheme rues say you woud usuay retire after age 65. How do you work out how much I wi be paid? I-heath payments from the FAS are for peope who have been advised that they shoud not work and getting FAS assistance eary is most suitabe for them. FAS payments are normay paid at 90 per cent of your accrued pension (the pension you buit up in your scheme), ess any scheme pension you receive. If your scheme has not bought you your own annuity poicy and is a transferring scheme, you wi receive a singe payment from FAS this wi incorporate any payments which previousy woud have been made by your scheme. This wi incude schemes where the trustees are currenty paying some benefits which are topped up by FAS. A transferring scheme is a scheme that quaifies for FAS and has not fuy annuitised its members pension benefits and for which the scheme s assets wi transfer/have transferred to Government. 6 Protecting Peope s Futures

7 There is an annua imit to FAS assistance known as the cap. This cap was 26,000 for those first entited before 1 Apri 2007 and is increased each year by the rate of infation. Whie the norma FAS payment eve is 90 per cent of your accrued pension, there is an exception to this. Broady, if you are a member of a scheme that has not bought you your own annuity poicy and is a transferring scheme which coud have afforded to buy you more than 90 per cent of your accrued pension, your assistance wi refect the eve of pension, and any increases, your scheme coud have afforded to pay. If this appies to you, your assistance wi be based on what your scheme coud have bought for you rather than 90 per cent of your expected pension, ie you may receive more than 90 per cent of your expected pension, but the usua rues about when your assistance wi be paid, and about ump sums, wi sti appy. Benefits for survivors If you choose to receive FAS payments eary because of i-heath, the amount wi be actuariay reduced to refect that you are paid over a greater number of years. This wi affect the amount of assistance your spouse, civi partner or partner may get when you die. They woud get haf the reduced amount. Because they are paid from an earier date and are therefore expected to be paid over a onger period, i-heath payments from the FAS have to be actuariay reduced. This means they are reduced by a formua, set by the Government Actuary s Department, which makes assumptions about things such as norma ife expectancy and interest rates. The reduction means you get broady the same amount overa as if you had waited unti your norma retirement age. But the monthy payments are ower because they are spread over more years. Remember that the payment begins up to five years before your norma retirement age. To note, FAS conditions to quaify for i-heath payments may not be the same as your scheme conditions and so, as a resut, you may be eigibe for i-heath payments from your scheme but not from FAS, or vice versa. Protecting Peope s Futures 7

8 When wi I start being entited to i-heath payments? If you meet the conditions, you wi be entited to iheath payments from the ater of the foowing dates: the date you (or your representative) first te us you can t work due to i-heath and that this is ikey to continue unti your norma retirement age, or five years before your norma retirement age. Can my i-heath payments be backdated? Your entitement wi start from the ater of the dates above. If we have not assessed your entitement before then, we wi make payments that refect the correct start date. So we wi make up the difference between when your payments coud have started and when they did start. Can I take tax free cash? If you receive assistance by way of a singe payment from FAS this incorporates any payments that woud otherwise have been paid by the scheme and you have not previousy received any pension or tax free ump sum payments from your scheme, you may now be eigibe to take some of your assistance as a tax free ump sum at the date your FAS payments start. The tax free cash payment can ony be made once your scheme s assets have transferred to Government. This may occur after your FAS payments have begun. Where eigibe, your ump sum is imited by certain FAS and tax rues. If you take some of your assistance as a tax free ump sum, your assistance payments wi be reduced, incuding any future assistance payments to your dependants, foowing your death. If your scheme has aready purchased an annuity for you, you wi not be eigibe for a tax free ump sum from FAS, but may be eigibe to receive one from your annuity provider. You shoud contact your annuity provider for more detais. 8 Protecting Peope s Futures

9 What if I have aready taken tax free cash? If your scheme has aready paid you any form of ump sum, the FAS wi convert that sum into what is caed a notiona annuity. FAS assistance needs to refect the fact that you may have taken some of your scheme benefits aready. We wi therefore deduct the notiona annuity from 90 per cent of your expected pension to give a revised tota amount. Important things to be aware of FAS payments at norma retirement age may incude increases known as revauation which aim to give some protection against infation. But if you take your FAS payments eary due to iheath, we wi appy revauation ony up to the time you start taking payments rather than up to your norma retirement age. This means you may get ess than if you had waited. Remember that i-heath payments are actuariay reduced to take into account the fact that you wi be receiving payments for onger. The exampe beow shows how much your assistance may be reduced if you choose to take i-heath payments. The coser you are to your norma retirement age, the smaer this difference wi be. The exampe expains the ikey position if you take your pension at the eariest possibe date. Exampe for i-heath payments You choose to receive FAS payments five years before your norma retirement age. During this time, infation is 3 per cent a year. If you had waited unti norma retirement age, you coud have got up to per cent more each year. This is because your FAS payment woud have been revaued up to retirement date and there woud have been no actuaria reduction. Protecting Peope s Futures 9

10 If you choose to receive FAS payments eary because of i-heath, this wi affect the amount of assistance your survivor and/or dependants wi get when you die. Their assistance woud be based on the reduced amount you were receiving. Pease consider the effect of the actuaria reduction and the oss of revauation if you are thinking of taking i-heath payments now instead of waiting unti your norma retirement age. Pease note: receiving payments from FAS coud affect any state benefits that you may aready receive, such as Empoyment and Support Aowance, Pension Credit, Counci Tax Benefit and Housing Benefit among others. If you are receiving FAS payments, you shoud te the office that pays your state benefits. 10 Protecting Peope s Futures

11 MAIN POINTS ON SEVERE ILL-HEALTH PAYMENTS More eigibiity rues for severe i-heath payments These rues appy in addition to those under Main points Who can receive payments from the FAS because of poor heath? on page 3. Peope who have a much ower ife expectancy because of their heath may receive severe i-heath payments from the FAS. To get severe i-heath payments from the FAS you must: be aged 55 or over, and have a progressive disease, and have a much ower ife expectancy because of the disease. For severe i-heath payments, we need evidence that you are unabe to work, that the disease you are suffering from is progressive (wi get worse over time), and medica information about your condition. This incudes detais of the treatment you are receiving and how ong you have had the condition. If you are unsure whether you have a progressive disease, pease speak to your GP or consutant. For FAS purposes, a much ower ife expectancy reates to those members who have a condition that coud reasonaby be expected to resut in death within five years. This does not mean that a doctor has tod the member that they have five years or ess to ive. It means that five years or ess woud be within the range that a doctor coud reasonaby predict for a person in their situation. The FAS does not consider other things such as ifestye in making these decisions. We ony ook at the specific condition, and its ikey effect on a member s ife expectancy. Pease note: if you think you have a termina iness, you may be abe to receive payments from any age without reduction. If you fee this may appy to you, pease contact the FAS using the detais at the back of this booket. Protecting Peope s Futures 11

12 How do you work out how much I wi be paid? FAS severe i-heath payments are cacuated at 90 per cent of your accrued pension (the pension you buit up in your scheme), ess any scheme pension you receive and subject to the cap. It incudes revauation up to the date of payment ony. Severe i-heath payments are not actuariay reduced (see page 7). They are paid at the fu rate of 90 per cent of accrued pension, ess any scheme pension you are receiving. There is an exception to this. Broady, if you are a member of a scheme that has not bought you your own annuity poicy and is a transferring scheme which coud have afforded to buy you more than 90 per cent of your accrued pension, your assistance wi refect the eve of pension, and any increases, your scheme coud have afforded to pay. A transferring scheme is a scheme that quaifies for FAS and has not fuy annuitised its members pension benefits and for which the scheme s assets wi transfer/have transferred to Government. If this appies to you, your assistance wi be based on what your scheme coud have bought for you rather than 90 per cent of your expected pension, ie you may receive more than 90 per cent of your expected pension, but the usua rues about when your assistance wi be paid, and about ump sums, wi sti appy. Benefits for survivors If you choose to receive FAS payments eary because of severe i-heath, this wi affect the amount of assistance your survivor and/or dependants may get when you die. Their assistance woud be based on the amount you were receiving. 12 Protecting Peope s Futures

13 When wi I start being entited to severe i-heath payments? If you meet the conditions for severe i-heath payments, then usuay you wi be entited to payments from the date the scheme manager receives your written request if you meet a the four conditions for entitement: 1. you are aged 55 or over 2. you have a progressive disease 3. you have a much ower ife expectancy as a resut of your disease ie, you coud reasonaby be expected to die within five years, and 4. you are unabe to work because of i-heath and this wi continue to be true unti norma retirement age. Can I take tax free cash? If you receive assistance by way of a singe payment from FAS this incorporates any payments that woud otherwise have been paid by your scheme and you have not previousy received any pension or tax free ump sum payments from your scheme, you may now be eigibe to take some of your assistance as a tax free ump sum at the date your FAS payments start. The tax free cash payment can ony be made once your scheme s assets have transferred to Government. This may occur after your FAS payments have begun. Where eigibe, your ump sum is imited by certain FAS and tax rues. If you take some of your assistance as a tax free ump sum, your assistance payments wi be reduced, incuding any future assistance payments to your dependants, foowing your death. If your scheme has aready purchased an annuity for you, you wi not be eigibe for a tax free ump sum from FAS, but may be eigibe to receive one from your annuity provider. You shoud contact your annuity provider for more detais. Protecting Peope s Futures 13

14 What if I have aready taken tax free cash? If your scheme has aready paid you any form of ump sum, the FAS wi convert that sum into what is caed a notiona annuity. FAS assistance needs to refect the fact that you may have taken some of your scheme benefits aready. We wi therefore deduct the notiona annuity from 90 per cent of your expected pension to give a revised tota amount. Summary of the main conditions for both kinds Conditions for payment I-heath Severe i-heath You must be a member of a FAS quaifying pension scheme You must be unabe to work due to i-heath and be ikey to remain so unti your FAS norma retirement age You must be within five years of your FAS norma retirement age. You must be aged 55 or over You must have a much ower ife expectancy You must have a progressive disease Detais of payments They can ony begin from five years before your norma retirement age They are actuariay reduced to refect eary payment The accrued pension is revaued up to the date payments begin 14 Protecting Peope s Futures

15 HOW TO APPLY FOR PAYMENTS FOR ILL HEALTH OR SEVERE ILL-HEALTH Asking for a form To ask for an appication form, pease contact us on as soon as possibe. You must te us on the form about: what type of payment you are appying for, and your i-heath and how it is ikey to affect your abiity to work unti your norma retirement age. Giving us evidence You wi need to send us supporting evidence. This coud be, for exampe: a GP s medica certificate evidence that you are entited to reevant benefits such as Incapacity Benefit, Empoyment and Support Aowance, Disabiity Living Aowance, or other benefits reating to i-heath a etter from a doctor, consutant or other registered medica professiona which recommends that you shoud not work a etter from a doctor, consutant or other registered medica professiona which states that you have a progressive disease and expains how you meet the tests for payment, outined in this booket, as we as providing detais of any treatment and when it was first diagnosed a etter from your occupationa therapist a etter from your former empoyer which expains that you stopped work due to i-heath copies of detais of your hospita appointments or of other medica treatment, and anything ese you fee may support your appication If you have to pay to get the evidence, we cannot refund the cost. Protecting Peope s Futures 15

16 Pease ensure the evidence supports what you say on your form. In particuar, it shoud incude: specific detais of your i-heath detais of how your i-heath prevents you working or means you shoud not work confirmation that your i-heath is ikey to affect you unti you reach FAS norma retirement age, or confirmation, where appropriate, that your condition is progressive. Aso give detais of when the iness was first diagnosed and any treatment you have had. If possibe, pease send your supporting evidence at the same time as your appication form. However, if you need to send us supporting evidence separatey, pease make sure you incude: your name your address your Nationa Insurance number, and the name of your pension scheme. We may not be abe to decide whether you are entited to payment unti you have provided supporting evidence. Other peope contacting us on your behaf Anyone can ask us for a form or give reevant evidence on your behaf. If they contact us, they wi need to give us: your name your address your Nationa Insurance number, and the name of your pension scheme. 16 Protecting Peope s Futures

17 After we receive your form and evidence When we have received your appication form and supporting evidence, we wi need detaied information from your scheme about your pension, so we can work out how much you may be entited to. We wi ask your scheme for this information as soon as we receive your form. We wi be abe to work out your iheath or severe i-heath payment when we receive the detais from your scheme. With your permission, we may contact your GP or consutant for more evidence if needed. Frequenty asked questions What if my scheme has aready bought me an annuity? If your scheme has bought you an annuity (a pension for ife), insurers wi generay aow you to take it eary, but reductions wi appy for eary payment. You wi need to discuss your options with your annuity provider. We cannot arrange for payments from your annuity to be made eary. What if my scheme is sti winding-up? If your scheme is sti winding-up when you appy, we wi work with your scheme s trustees to work out how much pension you are entited to. We can use this information to make an interim i-heath payment or initia severe i-heath payment unti we can work out your fina payment. The FAS wi decide whether to make these payments. When your scheme winds-up, we wi te you how much your fina payment wi be. We wi take into account any payments we have aready paid you. We may ask you to repay money if you are eigibe for ess than we have aready paid you. Protecting Peope s Futures 17

18 What happens if I start receiving an i-heath pension from my pension scheme after my FAS payments have started? You must contact us if your scheme starts to pay you an i-heath pension, as you may be overpaid. If you are overpaid the FAS may ask you to repay some of the money. If I take i-heath or severe i-heath payments from the FAS, what wi my survivor and/or dependants be entited to if I die? Detais can be found on the FAS section of the Pension Protection Fund website at But be aware that if your monthy FAS payments are actuariay reduced or are revaued to an earier date because you take i-heath or severe i-heath payments from the FAS, this wi affect the amount they wi get. Can I get eary FAS payments if I have a termina iness? If you have a termina iness and you are expected to ive for six months or ess, you may be entited to FAS payments without reduction, no matter how od you are. Pease note: if you think you have a termina iness, you may be abe to receive payments from any age without any reduction. If you fee this may appy to you, pease contact the FAS using the detais inside the front cover. 18 Protecting Peope s Futures

19 Protecting Peope s Futures 19

20 If you have any questions about a specific pension scheme, you shoud first tak to your scheme trustees. However, we are aways happy to answer any questions about the FAS. Further detais about the FAS and how it works can be found on our website at Or you can ca our customer services team and ask for more information and guidance. Teephone: Textphone: (Phone ines are open from Monday to Friday 9.00am to 5.30pm) The team can be contacted at: Financia Assistance Scheme PO Box 234 Mowden Ha Darington DL1 9GL Protecting Peope s Futures Updated Apri _A